Urbandigs Corona virus Update

I'm hearing similar, with a few really discounted deals that are in the pipeline.. some more than 20-25% down. I wonder if deals signed in mid March will be the high bar for discounts

are these 10-15 or 20-25% buyers cash or financing?

Most are financed from colleagues I've asked

20-25% off the late 2019 asking price seems right for the $4m+ segment. The celebrated mini-uptick in the last 3 months was because prices started coming down, as Olshan constantly pointed out. There is really no reason that prices should go up in that segment which is less mortgage-rate sensitive.

By the way, I count THREE properties >4m in contract this week -- at least a 50% increase! The good days will be right around the corner, right! Right?

I think people may be feeling a little differently vs when spx was 2200. 10-15 percent off ask Keith mentions as low ball bids seems more of the right discount for resales (basically 5-7 percent off pre-corona contract price as the discounts were in 5-10 percent of asks). Of course this may be another trigger for ultra-luxury price decline of 10-25 percent off current asks resulting in 20-40 percent off from 2015 trades/asks.

Manhattan prices have fallen since the SPX was at 2000 back in '16. Much more important are local supply/demand dynamics,which were in buyers' favor before corona and are only shifting further towards buyers. What used to be an insulting low-ball will soon be the clearing price on Manhattan >4m.

if most are financed, are sellers also allowing mortgage contingencies? i think the only way I accept 20-25% off is if I get something in return. pre corona, sellers were finally adjusting prices to reflect reality which means they are either breaking even or negative. if they now need to go another 20-25% below the pre corona prices then doesn’t that mean home values are lower than the seller’s mortgage ie, sellers owe money to bank? Shiet

George, I think that will depend on the property. Some townhouses are still way overpriced using my condo equivalent overly simplistic methodology I described in 116 east 95th street thread. If I were to be a buyer for personal use, I would go for the best fit for my family (something my family loves loves loves) for smaller discount rather than larger discount on a compromise property. Of course, for my hobby cum tiny re-development business, I would love to buy a wreck 10-20 percent off from 2019 year-end prices but no seller will bite.

And I am all cash buyer.

Btw, Keith can tell you how bearish I was on real estate going into 2008 and through 2009. I had a pretty elaborate spreadsheet and most properties I thought were 15-20 percent overvalued. I made many low ball bids for properties via Keith which were a little bit of compromise. Finally when we saw the apartment we currently live in, we had to have it (our initial bids were rejected without us realizing that the seller was a rather famous and ultra-wealthy person - but likely to live without pretenses). It is not what everyone wants but we absolutely loved it and still love it.

“But liked to”

Similar to after 9/11 as well as the more recent 'Great recession', you won't see much activity for the next one to three months. No surprise there. After Lehman Brothers failed, buyers weren't exactly speed dialing their brokers.

I started selling properties in February of 2009, quite frankly our business model is very attractive to the opportunistic buyers that initially enter the market.

Based on what I'm reading, this particular crisis is not going to knock the chair out from under the financial services jobs like 2008 did. In 2008 not only did a lot of our buyer base lose their jobs, the ones still employed were living in fear of losing their jobs.

The working poor and lower-middle-class of New York City and the rest of the country are taking a beating. God willing, we'll get through this crisis sooner than later so these people can get back on their feet.

There are certainly plenty of people in the real estate business that are facing some very difficult times as well. I'm fortunate that I've already been beaten up by the business cycle, so live well below my means. However for many people in this business, potentially losing 6 months+ worth of income will also be financially and emotionally devastating.

Ultimately I think the whole world comes out of this better and stronger. Yes, we're going to have to ride out some pretty rough seas initially. However, not only will New York City be a better place, I truly believe humanity will be.

Keith
TBG

@bpcconfused of the three buyers were working with right now to our financing one is cash, purchase price between 1.5 and 3m. I'd also say over the last two years 80% of the deals we've done are contingent on financing. Also saw a piece that chase was now tightening up their lending standards, I believe requiring higher credit scores and a minimum of 20% down on all new mortgages.

When was the last time the number of "taken off market" listings exceeded to number of listings on the market?

Chase joins several others in tightening the underwriting box.

https://www.cnbc.com/2020/04/11/jpmorgan-chase-to-raise-mortgage-borrowing-standards-as-economic-outlook-darkens.html

@300_mercer: Your comment about seller of apartment you currently own jumped out at me because we are drawn to similar properties (properties owned by high-net-worth-low-pretense individuals). We were shocked when we learned who the seller of our little Beekman apartment was, and when you are dealing with an apartment like that, the seller never "has" to sell and there is usually an emotion attached to the property, which takes the negotiation out of the rational.

P.S. - And our little Beekman apartment not only is nothing special, but actually offends many of our friends who have visited us there. ("What? THIS is your NY apartment?! Are you kidding me? - mean, mean, mean).

300 was certainly a typical client of mine back in those early days. It was good for me though because most agents wouldn't work with someone like him! Lol. That said most of the clients that I was working with wouldn't work with most agents, lol. I think it surprised both of us when the seller of the home he purchased turned out to be the CEO of a fortune 50 company.

Brokers were even less liked in 2009(see those old se threads) if you can believe that. I have a lot of funny and interesting stories from back then. One that always makes me laugh, a client that started out a bit adversarial, however after a few weeks working together the relationship smoothed out. After he got in contract he told me there was a pool going around his office betting on the likelihood of me actually giving him a rebate check at closing! He worked at a large Bank, this was spring of 2009.

You have to remember the attitudes towards real estate brokers was pretty harsh after the 2008 financial collapse. Leading up to that brokers continued to be arrogant, thinking New York City was bulletproof. There was a tremendous amount of animosity towards the brokerage community. I think most including the heads of big firms really learned from that, and as the markets started the shift after 2015 they didn't fight the trend. They actually tried to get out ahead of it, relying more on data and presenting a realistic opinion of the shifting market. This was in stark contrast to The brokerage communities attitudes circa 2007/8.

Keith
TBG

There was a funny rallying cry on streeteasy back in those days, 'buy now or be priced out forever'. Of course this was being uttered sarcastically by posters who were claiming to hear this from brokers.

It was around 2007, I had a business partner who was very successful, top producer as they say. I had been looking to buy a home in the northern suburbs at the time, the market was already starting to unravel out there, so I put that search on hold. At this time I was also very active on streeteasy, observing how disliked brokers were, at least here on the forum. However many of the critiques people had with the business resonated with me, and so I was already making plans to create a different model and leave the firm I was working at.

now my biz partner, friend was getting ready to buy another piece of real estate in southern California, a penthouse in a condominium in Calabasas. I said to her I thought it would be a good time to wait a little bit and see where the market goes. Especially since this was essentially an 'investment' property that she would potentially live in at some point in the future. That's when she looked me straight in the eyes and said, "if I wait, I might not be able to afford it in 6 months". I was like damn, brokers really are saying that! Lol.

Keith
TBG

A year or two from now I think brokers will be just as disliked because when people are making money they don't think a lot about spending money on transaction costs, but when they are losing money it's got to be because of the broker's commission.

George,
Looks like Olshan only came up with 2 for the third week in a row.

https://therealdeal.com/2020/04/13/manhattan-luxury-contracts-down-90-from-last-year/

Three weeks at the height of the Spring selling season:
2014: 107 luxury contracts signed
2019: 65 luxury contracts signed
2020: 6 luxury contracts signed

But don't worry, it's just a blip and won't affect prices much.

Not sure why 112 Franklin PH wasn't picked up by Olshan. Supposedly went into contract on Saturday.

https://streeteasy.com/building/112-franklin-street-new_york/penthouse

And the prior listing from 2012 with a different apartment number but the same asking price as today.

https://streeteasy.com/sale/626971

I've had a few sales that did not make it onto the olshan report. Not too long ago a penthouse at 225 West 17th Street.