Even Tribeca luxury taking a hit

Previous sale at appx $24mm. So down to 20mm makes sense as ultra luxury is down 15-25 percent from the peak. “Affordable” end in Tribeca in $1500 per sq ft range is down 4-5 percent.

There is also unsold new development inventory close to Broadway in “Tribeca East”.

This building has SO many structural problems.

Attached could you post a link or are you hearing this "on the street" so to speak?

Interesting to note, what I always say, 80% of this is getting the price right. Then it will sell. Otherwise everybody's doing the exact same thing; RLS, Streeteasy, pictures, staging etc.

I'm sure the person that bought this for 20 something million, could afford it at 29 million. The real paradigm shift has been in this psychology of the buyer. When you're in the throes of a manic buyer market, like 2014/2015, you can't see the forest for the trees.

Keith,
That's why I say we are still in for a lot more market correction. What we are hearing from a lot of brokers that the majority of potential purchasers still think the market is to high. In addition if you do a realistic rent vs buy comparison (especially with realistic concessions factored in on the rent side, plus no longer just assuming huge appreciation if you buy) the numbers still aren't even close.
The market psychology was extremely on the side of the seller for a long time and now it's on the buyer's side, and brokers jumping up and down and screaming "it's a great buying opportunity" isn't going to change that. As Hayden Coleman used to say (when he was a principal at Coleman Neary Realty) "Real Estate is the only thing no one wants to buy when it's on sale. If Bloomingdale's marks down a table of sweaters by 50% people will claw each other's eyes out over it. But Real Estate? Nobody wants discount real estate."

I want to buy it at a discount (:

Keith, I think at $20mm vs $29mm, the question is what other options are available at that price range. Currently, there is still oversupply in the ultra-luxury segment despite 15-25 percent correction.

Perhaps the ultra-luxury segment is where both 30 and I can agree. There is more downside in addition to 15-25 percent correction. However, in the affordable segment of $1100-1600 per sq ft renovated in good areas of Manhattan, market can go up of down like any other asset but not much on either side.

We certainly saw a very big uptick in business over the previous four weeks. That trend seems to be continuing, at least for now... unfortunately I don't have a lot of personal experience with the over 20 million dollar market (but I'm working on it (;

Keith
TBG

Taking a look at UD's latest stats shows almost all of them are negative for Manhattan. All stats are YoY % change for the given time period. I believe the major question will be how potential buyers are going to react to the appearance of negative comps. The danger here is that you can get a self-reinforcing downward cycle if the next wave of buyers try to protect themselves from a decline.

Supply: +14.3% as of 3/2
Pending Sales: +4.2% as of 3/2
Pending-to-Active: -9.8% as of 3/2
Days on Market: +25.3% as of 3/2
Price / Sq Foot: -5.1% for Dec
Median Sale Price: -6.8% for Dec
Monthly New Supply: +7.8% for Feb
Monthly Contract Activity: -3.6% for Feb
Re-Supply Pace: +25.8% for Feb
Monthly Closed Sales: -19.6% for Dec
Median Listing Discount: +61.5% for Dec
Absorption Rate: +36.2% for Dec
Off Market: +33.8% for Feb
Sales over Asking: -40.9% for Q4

Supply up and contract activity down over a year ago when just about everyone the market was awful. Resupply pace, days on market, etc all increasing.
Also, as far as I can tell you have more units leaving supply due to being pulled off the market than going into contract. When was the last time that happened?

The numbers look much better for resales suggesting problem is really new development which are overpriced.
Pending sales up 14% YOY. Supply +20%.

Statistics even better fpr 3+ bedroom resales.

21% vs 13.6%.

Supply still outpacing demand and that's with record numbers being taken off the market.

for 3+ bedroom New Development
-20% and +12%. Clearly that is where the issue it.

300 - question about those stats - I assume that the baseline denominator is the prior year, is that right? In other words, if there were 1,000 sales in the prior year and 10,000 units in supply in the prior year then you would use 1,000 and 10,000 respectively?

If so then comparing those percentages doesn't seem like it will show the picture. Sales could be up 50% (to 1,500) and supply could be up 20% (to 12,000 units), and supply would be far outpacing sales, even though sales were up a higher percentage. It seems that comparing gross numbers would be the more helpful metric.

Here is Market Pulse which is pending sales / active listings. Higher number suggests things are moving. There are other statistics which are better but they are at 2 month lag.

All condo+ Coops 0.38 (-9.5% YOY)
ALL Existing Resales 0.42 (-4.5% YOY)
ALL New and Recent Developments 0.29 (-31% YOY) -- This is where the trouble is.

ALL Existing Resales 0.33 (+6.5% YOY) - Seem ok
ALL New and Recent Developments 0.21 (-30% YOY) -- This is where the trouble really is due to high absolute $ and high $ per sq ft apartments and not all the inventory is listed.

Sorry ignore previous post. See below with correction.
Here is Market Pulse which is pending sales / active listings. Higher number suggests things are moving. There are other statistics which are better but they are at 2 month lag.

All condo+ Coops 0.38 (-9.5% YOY)
ALL Existing Resales 0.42 (-4.5% YOY)
ALL New and Recent Developments 0.29 (-31% YOY) -- This is where the trouble is.

3br+ Existing Resales 0.33 (+6.5% YOY) - Seem ok
3br+ New and Recent Developments 0.21 (-30% YOY) -- This is where the trouble really is due to high absolute $ and high $ per sq ft apartments and not all the inventory is listed.

Here's that last chart 300 mentions.. we have a Get Shareable Link for UrbanDigs users, so you can share charts on these forums

https://www.urbandigs.com/newdev-charts/market-pulse/3-beds/?agentid=58

Let's talk about those numbers:
Market pulse is DOWN from last year pretty much all across the board from last year which almost everyone admits was horrible - and now it's worse. Yes it's "more bad" in New construction, but a market pulse of <0.5 isn't good, it's just not as bad as a calamitous 0.29. And again you have to consider this is in the face of record numbers of "off market" because I think the way Urban Digs counts them each off market kind of counts the same as half a sale in terms of the direction it pushes the index.

TeamM,
Even though number of contracts is slightly up from last year, it is being outpaced by growth in number of listings as can be seen in the "resupply pace" (up 25.8% from prior year) and "monthly absorption rate (up 36.2% from prior year).

One might think that absorption rate going up could be a good thing the way it's worded but it's expressed in number of months it would take to absorb existing inventory if no new listings came on the market. So the lower the number the more healthy the market, and the number growing indicates a less healthy market.

Urban, Can not access on my computer either. Takes me to the agent page.

30, you're starting to sound like an economist ;) Feedback from clients new and old has been the same; market seems to be picking up. I certainly don't want to ignore the data, it will be interesting to see how this year plays out.

Perhaps there will be a divergence between data and actual activity. We've certainly seen this happen in the equity markets occasionally. Data indicates a recession or correction, but the bull train keeps rolling on.

I certainly am not saying we're in for another seller market anytime soon. But perhaps we wont to see the steep across-the-board market declines that you're predicting?

Keith
TBG

Keith, the issue here is that UD's data is a direct measure of the real estate market vs. proxy metrics in the case of equities. You might just have a unique slice of business that's not as affected.

I don't think we are going to see massive across-the-board declines, but certainly another 10-15% down with stagnant prices from there is well within the realm of possibility. I've already seen closed sales from last year year which easily exceed that loss, and they are not in the ultra-luxury new development segment already ID'ed by 300. People are getting a nasty wake-up call that Manhattan real estate is not a one-sided bet.

300, hmm.. any chance you can try a different device and see if it works? Anyone else try this link and advise if it displays or not?

https://www.urbandigs.com/newdev-charts/market-pulse/3-beds/?agentid=58

Thx for helping to debug.

Keith,
If I'm the economist, how come it's you guys who are saying "assume a can opener"? (Let's see if anyone here knows that joke)

Noah,
I think it goes to the page you want, but then there is an unclosable popup which overlays the entire screen which starts off with:
"Access this feature for Free by Connecting with an UrbanDigs Pro Agent below"

Thoth,
One thing I have mentioned before is that there may be a difference in perception between buyers who are just entering the market and buyers who were slightly priced out of the market before and were hoping prices would come down 5% to 10% so they could jump in. I suspect that Kieth has a sizable pool of such buyers who he has been working with for quite a while and now his loyalty to those buyers is being repaid with their loyalty to him. However I also suspect he doesn't realize how unique that makes his buyer pool vs the average agent's buyer pool.

Yes 30, probably a third of the deals we've done since September are with clients we've been working 3-4 years! I've also recently acquired some new clients that have been in the market quite a while.

And I'm the first to always tell clients that whats happening in my little world is certainly not a proxy for what's happening in the greater market. I'm certainly very interested in and appreciative of the data that we get from Urbandigs, I refer all my clients there.

Thoth I think what you're saying is very plausible, another 10 to 15% leg down, at least for some segments of the market. Time will tell.

Keith
TBG

Noah, It does not work on my Windows computer either.

@noah, The link is always worked for me.

Keith, You are probably paying monthly fee for the urbandigs site as a professional.

@Noah: Works for me, and I'm not a professional subscriber.

@Keith & 30: Yes, this upcoming season should be very telling. We'll see how deep this pool of buyers at these price levels looks like.

@300 : Great breakouts above. I wonder how much of difference is also driven by the fact that owners of existing units may have more leeway to take units off and "wait it out" vs. developers who need to move units. Depending on how accurate this is, the new/recent dev price trends could be more reflective of where the actual market is at right now.

I view it differently. The new development spread over resales was never justified and it is still too large in my opinion. Prime examples are 157 West 57th and 432 Park Avenue. Even if they come down another 20 percent to 4-5k per sq ft, they are still too expensive relative to $2000 per sq ft high quality resale condo.

I don't think we have ever seen "new car phenom

Phenomenon in NYC before (the second you drive it off the lot there is big depreciation), but perhaps with some of these new projects we will

Resi Real estate “new car premium” traditionally has been no more than 10 percent everything else being equal - which is pretty hard to find. I can understand 20 percent as the new product is better with more features but it is still at least 35-40 percent all the way upto 100 percent of more.

@300 Thanks for your response. The reason I was wondering about the difference between existing owners vs. developers is that I'm seeing a steady trickle of taken off the market properties coming back with 1-2% price cuts. Clearly the owners still want to sell, since they are putting their units back on the market, but I assume these small cuts suggest that they don't feel any urgency to do so.

Agree. Also, they know that they are not that far off on pricing from the market - perhaps no more than 5-7 percent away on average. Developers made up asking prices and they know that. I will post an example of made up new development price vs what their bottom line was.

https://streeteasy.com/sale/1376024

No special view but good light. Not prime area either. Traded at 2500 per square ft at $3.75mm vs call it comparable high end resale at $1800-2000 per square ft in that area. 20-25 percent premium. Original made up ask $4.9mm. This apartment coming down 25 percent does not really impact resales in a significant manner as it still traded at fair bit of premium over resale.

Penthouse will probably take another 30 percent cut before it sells and it would be an outrageous high price at $40mm.

“It would still be”

"This apartment coming down 25 percent does not really impact resales in a significant manner"
I wouldn't want to be the owner of 11C who bought in at $4.5 million

I am using “resale” as distinct from “new and recent developments” - similar to urban digs. In my mind resale is more than 5y old developmet or conversion.

Or call it more than 10y old. Do not know what cut-off urbandigs uses as 157 west 57th is technically 7-8 years old.

New Dev, less than 5 years
Recent Dev, 5-15 years
Resale is technically everything except new Dev

Lol with the shareable link.. works for some, not others. I'll tell my team about it and see what's up.. thx guys

Thanks. What does the category “new and recent devleopments” include? As per above it would suggest upto 15 years old. Is 157 west 57th which is more than 5y old in “resale” category?

Yes, but it's considered recent Dev, which is considered resale.. we just added that he category in - https://www.urbandigs.com/building/157-west-57-street/ - shows under building address.

Added that NEW category in, I meant

In the link below, will 157 west be included in “resales” or “new and recent development”?
https://www.urbandigs.com/marketwide-charts/

This sort of fits in with this conversation. Seller of condo in a solid downtown location called me yesterday, listed for about 4 months with a large firm, not even a low-ball offer yet. She's a friend of one of our clients who suggested she give me a call. I assured her the reason it wasn't selling had nothing to do with the brokerage or the agent. It had everything to do with price and I guess you could say timing (went to market September) not the time to list a property with an aspirational ask.

Condition is fine but somebody spending around $2M is not going to want to live with dated bathrooms and kitchen. It's also non-doorman and has a quirky layout since it's a loft conversion. A neighbor sold a similar unrenovated apartment for roughly what they're asking in early 2017. They just can't imagine selling their home for 2 or 3% less than that! However currently that's what it's worth. That 1550 a square foot they are currently asking easily becomes 1850 sqft post-renovation.

I mean over four months on the market without even a low offer is so telling, you don't need Urbandigs to tell you your pricing is off! But rather than accept reality and sell it at a very tidy profit, they're fighting the market and considering renting it even though they've already purchased another home.

Hmm let me confirm but I think new sales from that building that roll in will be in both, as recent Dev is considered resale.

I know it's a bit different, but we did consulting with new Dev experts as we recoded our chart room and they showed to create that recent Dev category for further splicing.. try to consider that be category part of resale.

@Keith - I've seen units with that pattern over multiple years (list, pull / rent, re-list at tiny discount, rinse and repeat), so that seller doesn't even seem that bad of an example. I guess hope springs eternal.

On the ground, I am seeing sellers still not coming to terms with the reality of the market. Negotiating like it is still 2016/2017. I went to a Streeteasy seminar last week and they stated that about 50% of all listings go off-market today. I am almost 100% active on the buyers side looking for "deals." Those sellers willing to play ball get the deal done. Two deals last week went south because the sellers were being unrealistic on their counters, and my buyers are willing to look elsewhere.

Are your buyers getting done somewhere else? New development or resales in $1200-1600 range renovated condos?

Any market where half the units end up being taken off the market because sellers can't sell is far from healthy.

How many times can 300 repeat his "$1200-1600/sqft is safe" jingle before all NYC buyers take heed and put the floor in that range? :shaking head:

I don't know what "50% of listings go off-market today" even means... but if you want a historical comparison, in 4Q 2015, 2,973 apartments were sold. (This is a Miller Samuel number for Manhattan apartments -- sorry, TeamM, not including townhouses here).

In 4Q 2018, 2,432 apartments were sold. So sales volume, in terms of number of transactions, from a "hot" market to a "cool" market, down nearly 20%. For brokers, that's less pie to pass -- thanks, Tax Bill proponents!

But PRICES haven't slid anywhere near 20%, at least not in my two worlds (Downtown and the UWS). I'm still seeing "appropriately priced" units (which feels like around 10% off peak pricing, though it varies by submarket) going into contract.

I'm going to paraphrase this as "the market sucks for brokers, but I don't think it's as weak as buyers-on-the-fence want it to be."

Here are some things signed February/March in areas I'm working in. I like them all, but none of them, with apologies to the brokers, strike me as screaming deals either:

https://streeteasy.com/building/cast-iron-house/6b?context%5Bcontroller%5D=%23%3CBuildingController%3A0x00005578c6682128%3E&context%5Bcurrent_user%5D=1018020&hide_if_empty=true&section=sales

https://streeteasy.com/building/32-gramercy-park-south-new_york/11k?context%5Bcontroller%5D=%23%3CBuildingController%3A0x000055ec0991de80%3E&context%5Bcurrent_user%5D=1018020&hide_if_empty=true&section=sales

https://streeteasy.com/building/305-west-104-street-new_york/6d?context%5Bcontroller%5D=%23%3CBuildingController%3A0x000055ec0d9c7238%3E&context%5Bcurrent_user%5D=1018020&hide_if_empty=true&section=sales

ali r.

Ali, Thank you for the info. Tribeca resale (ex post 2008 developments) are down around 5 percent in price from the peak level in my analysis. Resales in least desirable areas of Manhattan are down 5-10 percent but no more for sure. If the buyers are looking for a bigger discount from the peak prices, they are not really getting done.

Properties needing gut Reno may have a larger discount to account for carry and trouble of the buyer. Townhouses in UWS down 25 percent along with many $10mm plus properties and prices similar in price per sq ft to resale condos.

We're selling apartments from Harlem to Sunset Park. Discounts as deep as 20% from 2014... But that window of (buyer) opportunity that opened up from around August until the second week of January is closing. Agree, no significant discounts in Prime downtown neighborhoods. However Manhattan is more than Tribeca, WV Soho etc.

Brooklyn two bedrooms under $1.3, muya caliente, I may have said $1.5 in a previous post.

We are definitely seeing buyer activity pick up. Had an accepted offer on a two-bedroom in Harlem, term sheet in hand. 2 hours later get a call they've got another bid and want to ask for highest and best by 5pm tonight...

Keith, Thank you for the color. What type of properties in which area went down 15-20 percent before potentially bouncing back? Thoth has posted a couple of examples in FiDi already. Will you be able to post a couple of examples of resales which were significantly down when you get a chance?

I know most of you haven't been around as long as I have, so a "normal" market correction to you looks like 2008/2009, but to me that was an outlier (and the quick fast downturn and snap back was because we had both a "the world is ending" financial event followed by an unprecedented $780 billion government bailout).
But let's go back further and see what another downturn looked like:
The stock market crashed October 1987. Prices didn't even really start going down till 1989. And they didn't bottom out until 1992. So it took about a year and a half for lower transaction volume to start showing up as lower prices and another 3 years to get totally baked in.

30, You are missing continued low rates , Fed being done and strong employment. No gurantee of a sharp bounce back as we did not really correct much in resales but some thing to consider. I made a very nice living with historical financial analysis going back upto 30-35 years and one can not ignore what is happening in the world today. If you told some one 25 years back that we can have sub 4 percent employment with 2 percent inflation, you will laughed off the room. So historical learning has to be adopted to current state of the world.

So you think that trumps the law of supply and demand?

Supply and demand is a very different question from how long it took the markets to react and correct in 1987 and what it may take now. The current market is highly segmented with oversupply relative to demand in new/recent developments skewed towards ultra luxury. Resale is actually reasonably healthy unless what you are selling needs a gut Reno in which case the discount may be upto $750-$800 per sq ft if you need landmark windows costing $10-15k a pop etc in a very nice building. Pedestrian gut Reno needing resales in Manhattan are certainly $500 per square ft discount without replacemet windows. I think that is fair discount once you account for carry and trouble.

Show me the segment of the market where supply growth is not outpacing demand (new contract) growth.

Manhattan Resales

<600k
0.58

600k-1m
0.49

1m-2m
0.49

I assume the figures you listed Urban Digs "Market Pulse." For that metric, anything under .5 tends to indicate oversupply. So using that only resales under $600k aren't in oversupply (I think that's like 15% of the market).
And even for that segment, .58 isn't great. Take a look at what it was back in 2014.

What was the market pulse in 2011 before it climbed higher and higher?

Or you could just use the number of new listings which came on the market this month vs the number of contracts signed, but that looks even worse since taken off market skews UD "market pulse" in a favorable direction when units being taken off market because they couldn't sell is actually a negative market indicator.

I understand calling sentiment is more of an art than science and there is no right answer but why do you think market pulse turned upwards in 2011.

Because unlike today demand was increasing and supply wasn't. And more importantly people weren't taking apartments off the market because they couldn't sell them in greater amounts than signed contracts.

You are only looking at velocity and not acceleration/momentum.

Ah, the momentum and mean reversion based on which I made a very nice living at the top financial institutions for a long time. Retired from that game in financial markets and following my passion about real estate.

When does upward or downward momentum turn? What causes it to turn in real estate? It is a fun discussion. I know there is no right answer. No one can tell.

So peak supply in 2011 7900
Current 6472

So peak supply in 2011 7900
Current 6472

30yrs_RE_20_in_REO, thoth and 300_mercer and others - the question remains - how much lower will pricing go from here?

I use Streeteasy condo for marker decline which is down appx 6 percent from the peak. Median condo is probably in $1-1.5mm range. Probably down less than 6 percent. Higher priced say $3mm-5mm resale segments are down probably 7-10 percent. Ultra luxury down 15-20 percent.

I think under $2mm has limited downside now due to low rates. May even go up. Ultra-luxury may go down another 10-20 percent due to high level of inventory. $3-5mm resales, probably flattish.