Market Watch 2020

Link to most recent tranche of the discussion: https://streeteasy.com/talk/discussion/45512-market-firming-up-threat-2020-version

Mcr, I am glad that I am not the only ones with typos. I skip words all the time.

I think ridiculous low mortgage rates are a game changer. Not sure they will last. One has to be really bearish and biased to do buy vs rent calculation for resales and not come out in favor of buying.

I was shocked at the Dow yesterday because while I expected Friday's Fed announcement to staunch it cratering, I saw no reason whatsoever for it to post a record gain. But then today on the actual rate cut the index tanked another 785 points. What does this mean? Is it that Fed cuts are not effective because rates are already so low? Or because if we are on the cusp of a major worldwide recession rate cuts don't matter? Or is the market just bipolar at this point and we will see another 1,000 point gain tomorrow?

**IF** the stock market continues to slide and goes below 22K (25% slide) I don't see any way it doesn't effect the Real Estate market (NB I still think our NYC market is going down absent that, but if that does occur I think it turns that into a lead-pipe cinch).

What would say if market is up 3 percent tomorrow? Market is volatile due to uncertainty. You can’t make too much of day to day volatility. Mr. Market is very temperamental and bipolar.

I meant INDEED very temperamental and bipolar.

The number of contracts signed in February in Manhattan was 841. This is a 12.1% increase YOY, but it's still 16.2% lower than 2017 which was well into the market slowdown. At the same time there were 1,443 new listings (who knows how many there really are if you include all the New Development shadow inventory) but if there is 73% more new inventory that contracts signed, how does that relieve downward pressure on the market?
And we are still seeing huge numbers of "taken off market," every one of which represents a "tried to sell but failed."

Volatility/uncertainty is one thing in the stock market, but in the Real Estate market almost always forces buyers to the sidelines to "wait and see."

On the market pulse for Resales, YOY increase is very good but in absolute terms no one would call it a seller’s market.

Battle of declining confidence with recent volatility and selloff vs lower rates. Who wins?

Usually when markets fall like this, buyers pause and bid less aggressively. If you can get extra discount and price in this situation, plus low rates, may prove a good deal should this virus get contained.

I feel like what's different this time with the virus vs sars, need, h1n1, etc, is how social we all are today and communication is so fast that fear is spreading in a totally different way this time versus the others. I'm also a bit concerned about headlines once we start testing at full capacity I'm coming weeks

It is almost solely depending on the FED

I think that a lot depends on the elections. If things continue on the same path, I don't see any reason for prices for most segments of real estate to increase and I see plenty of reasons for them to decrease. In terms of market activity, I think that the uncertainty will make it hard to transact at high prices until after the election.

If it looks like there could be a swing such that there could be tax changes, particularly something that would undue the SALT hit that NYC took, then I might change my view.

So as I try to understand why we have just been going nonstop since January 1st, I now have a couple of thoughts based on what I'm experiencing. First, I absolutely acknowledge we have a successful business model that has kept us busy through various market cycles. But as they say in Ireland, this is beyond the beyond. I spoke to a broker at Sotheby's yesterday who confirmed, they're also slammed.

So what we're actually seeing are buyer's still being very selective and still being very price-conscious. There certainly are less buyers in the market than there were two years ago, similar to the fact there are a lot less people holding stocks currently. However the buyers that are in the market are absolutely awestruck buy a few things; real estates on sale relative to a few years ago, underlying economy is healthy, interest rates are just ridiculous! I think it's got to be very difficult for someone who ultimately prefers ownership to not purchase when you can get money at 2.5%!! At least for now coronavirus fears have not slowed things down, we will have to wait a little longer to see how this plays out.

Keith Burkhardt
TBG

I'm a current buyer and if I had my druthers I'd walk away from my deal. Already in contract, heading toward closing, so seems there's not much I can do about it (because of NYC standard 10% deposit). I'm interested to see what this coming weekend is like. I predict a steep decline in open-house visits. Beyond that, I'm no expert, I'd expect to see a steep decline in contracts being signed. Who wants to move in the middle of a potential "lock down" or quarantines, health emergency?

If I could reasonably delay my closing by 6 weeks without risking deposit, that might make me happier. With the thought that either NYC is a shit-show and maybe I can get out of contract, or it's not, in which case I will be much happier moving/renovating my place.

https://www.washingtonpost.com/opinions/2020/03/03/how-economic-policymakers-can-respond-growing-economic-shock-coronavirus/

Keith: Thanks for the update. Is there anything you can say from the deals that you have seen about pricing? My hypothesis has been that there is definitely more activity, but at lower or flat price points. I was tracking several units on a whim, and I noticed that the only ones that did enter contract were all ones that priced themselves in a way that clearly set them apart vs comps or peers.

My obervations are in line with thoth's, suggesting that the market is operating with as much efficiency as it can in NYC. I continue to see apartments that I personally view as "bargains" going into contract at a regular clip. Again, this is after seeing zero activity in the fall.

You hit the nail right on the head thoth, price your home according to the current market, and it will sell. But I would add it's more or less the best of the best homes and strong locations that are getting the most action, when priced correctly.

Absolutely agree most buyers in this market do not want to pay the asking price, they expect to negotiate. However there are some gems that are priced soft, and are attracting multiple bids after 1 open house. We currently have 2 best and highest bids out on properties now. One on the upper west side (Park block) and one in prime Gramercy Park.

That said there are plenty of homes that are sitting neglected by buyers.

https://streeteasy.com/blog/top-buyers-markets-nyc/
https://ny.curbed.com/2020/3/3/21161850/best-nyc-neighborhoods-buyers-2020
"With New York home prices on the decline and listing inventory on the up and up, it’s a relatively good time to be a buyer in New York. Nowadays as listings can linger on the market, buyers have a special edge in negotiating sales prices."

It seems like just a few days ago 300_mercer posted that Existing Resale Market Pulse was up YOY >30%. Now it's at +20.6%. Is the metric off or is the market that volatile? (Or am I misremembering?)

Market pulse itself is a volatile number and as one would expect yoy is even more volatile.

The results are in for the Gramercy best and highest:

"Good morning,

Thank you for submitting your final offer. A total of six offers came in, and the seller chose to go with a higher offer. If anything should change we will reach out to the next best offer.

Thank you, "

Just for everyone's amusement, this is one listing that should be the textbook example of chasing the market down:

https://streeteasy.com/building/15-william-street-new_york/25a

You think that after 1,235 days on the market, they would cut their prices a little quicker.

Three new condos which have "launched sales," but still no listings:
Lantern House - 515 West 18th St
1 Wall Street
Waldorf Astoria Towers - 303 Park Avenue

Just these 3 buildings represent 1131 units on the market yet not accounted for which is greater than UrbanDigs has for the entire Manhattan market as on the market - 1,073.

Which other buildings have launched sales but as of yet are not accounted for with actual listings?

30 - as always, you make good points regarding the underlying data, although I think that in many cases, we need to split the numbers into different markets. I don't see "Manhattan" as a single market. In some cases, I think that means the problem is even more acute than these high level numbers look and in some cases it is less acute.

When looking at actual properties for individual situations, particularly when someone factors in schools, commutes, size, price, etc., I think NY is divided into a lot of smaller markets. In many cases I think the new buildings are a disaster for addressing these markets.

There's obviously grey areas in all of this. People will make compromises to commute further, etc. if the price is compelling enough, but in some cases those are big stretches. The phenomena particularly occurs to me when looking at some of those new condos you listed. They'll add to the pain of oversupply in some markets but I see them as largely irrelevant for many of the markets.

As a somewhat related point, I don't envy the people trying to sell those apartments in the Waldorf Astoria...