Today's UWS Market Value compared to Pre-Covid

I think I've made my opinion fairly clear on this forum. I've said I think prices are headed down 35% to 50% off of peak levels. And I don't think it's because of COVID. I think that's where the market has been headed for some time and all Covid did was catalyze the reaction. And I've seen very few examples of what I would call "panic selling." If anything the opposite.

In most of the rest of the country things are booming because there are fairly extreme supply constraints. But here I think it's pretty obvious we have a supply glut and sellers aren't taking that into account in pricing. And from listening to interviews with brokers it appears there are tons of buyers out there who are expecting lower prices. I see the brokers characterizing these buyers as "unrealistic" but if there are tons of sellers, not so many buyers, these buyers largely are ready to buy but only at lower prices, and deal volume is low as a result then I'm not so sure that it's the buyers who are the unrealistic one's.

Out in Nowhere, I find it refreshing that brokers say things in interviews like, "I don't know if the 15-30% price increases we have seen since covid are sustainable." Hmm, people being realistic in a market with very little supply trying to entice more sellers. The equivalent in an oversupolied market like NYC would be, "Sellers are really flexible and it's not clear how long 15-30% price drops from the peak will last". I'm generally with 30, but this is what smart brokers would say.

I find it interesting George, that where you decided to park your money in real estate, brokers sound like saints. However here in New York City, you paint them in a much different light...

Personally I think there's good and bad in both markets. At least that's been my actual experience with buying and selling real estate outside of New York City. The fact remains it's a very low barrier of entry to get into this business, whether in the suburbs or the city. And in searching for a good Agent, for example in Vail, I found most to be uneducated salespeople. However I did manage to find someone who is excellent and absolutely understood the market and the forces that drive it. Gave me very realistic projections for roi, and acted more like a consultant than a commissioned salesperson.

Just my dos colones.

Keith Burkhardt

Thanks for your replies, but I believe your 35-50% off peak levels was from true peak in ~2016. I want to ask what you think true prices have fallen since right before COVID (December 2019). I’ve heard anywhere from 5 to almost 15%, which is a large spread. Also, as now we have some responses, want to ask again, where do you see the market going in the next 1-2 years? Down, up, how long until we get back to December 2019 (pre-Covid) prices?

NYC, There is a huge difference in price decline based on absolute price and price per sq ft. If you are talking about ultra luxury $20mm plus, 25-30 percent decline has already happened from crazy asks and actual sales in 2015. But you are asking about $1mm coop. From what I have seen, if $1mm coop is in move-in condition, average price decline is probably 5 percent since pre Covid.

First off, a reminder that I sell on the UWS (just closed on a 2/2 on West 86th) and I'm at [upstairsrealty (at) gmail] if you want me. I'd love to pitch.

Secondly, sympathy -- I have tried unsuccessfully for years to change my username from front_porch without losing my posting history and SE has never managed to do that for me. If you do figure out how to do it, let me know.

Thirdly, while I take 300 Mercer's point of 5%, if you have a 2-BR, I'd say 10% ... take whatever you would have listed it at, pre-COVID, and knock 10% off, and that's the current listing price. {If it's a 1-BR, I'd need to see it before making the call.) Then you work with buyers and see what negotiability you need to offer to get the deal done -- that's going to depend on the availability of inventory in your niche, and the relative advantages of your property. But we're certainly talking single-digit discounts, not double-digit ones.

Fourthly (is that a word?) I think we might be heading into more of a shutdown again -- the case-count numbers are not good and too many people are going to travel for Thanksgiving.

But there's no reason we shouldn't have a good spring. UWS isn't as hot as Brooklyn but deals are getting done even now. People are coming back to town for work, and people who stayed want WFH space. People who did flee to the country and are still there will discover that the country isn't virus-free either, and that winter in the country isn't all that. Bonuses are coming in fine, stock market seems to like Biden, good vaccine news provides optimism even if the vaccine doesn't reach the hoi polloi for awhile.

I know that doesn't answer your question for "how long until we got back to Dec. 2019 prices," but no broker can answer that. If we could accurately forecast asset prices we wouldn't be hawking co-ops.

But just as an UWS resident who is sitting in my co-op, I think the driver we would need for more recovery would be five-day in-person school... and that's likely, what, Sept 2021?

ali r.
{upstairs realty}

Ali, While you know the market much better than I do, at the low $ end asks have not changed that much (they are certainly down) but discounts have gone up by a few percent. With the vaccine news, all that may start to change by Jan after the spike is behind us.

There are a lot of reasons that it will not be a good spring, which have been covered extensively. But should OP sell now and what's the right price? Depends on how badly you want to get out.

As for brokers, sorry to divert the thread onto a tangent, but I have indeed noticed a big difference in the attitude of brokers. It's a small sample, but Mrs. George has wanted to buy in NYC since 2015 so we've met a few, all of whom have tried to get us into places that aren't appropriate for us, at a price that's way too high. We worked with a few in Nowhere and didn't get the same feeling. I think that the culture of brokers in NYC is an issue for REBNY to think about.

The situation reminds me of the old Simpsons episode. Lionel Hutz praises Marge Simpson for the fact that everyone loves her as a broker, and she has a great “no-pressure approach” but isn't selling anything.

Marge: “Well, like we say: ‘The right house for the right person.’ “

Hutz: “Listen, it’s time I let you in on a little secret, Marge. The right house is the house that’s for sale. The right person is anyone.”

To drive home his point, Hutz shows her photos of houses for sale.

Marge: “It’s awfully small. … “

Hutz: “I’d say it’s awfully — cozy!”

Marge: “That’s dilapidated… . “

Hutz: “Rustic!”

Marge: “That house is on fire!”

Hutz: “Motivated seller!”

Well, George, it is a universal problem with salespeople that we have a bias towards selling our inventory rather than selling things that we don't have. That said, there's some old Dilbert line to the effect that "what customers want is better products for free," and that can be somewhat true of buyers. I can't speak to "places that aren't appropriate for you" since AFAIK I've never met you, but you do seem, based on Internet persona, to be more of a condo/townhouse buyer than a co-op buyer, and those are markets that can be pricey.

Ali, Good one.
"what customers want is better products for free,"

I've tried to avoid playing "pretend Covid expert" on these threads but I really don't think the issues are going to be resolved in time for the Spring selling season even if vaccines get approved tomorrow.

nycbuyer20,
Apologies in advance for how strident this is going to come off:
You can listen to those who are telling everyone "it's a great time to buy right now" (with the obvious implications that prices are about to start rising) just like they said the same thing last Fall, and you can see the result. Or you can get out now for whatever price you can get, unless you want to bet telling yourself next year "I should have gotten out in December 2020" just like you're telling yourself "I should have gotten out in December 2019" now.

But instead of just getting out while you can you're trying to calculate numbers to razor thin margins which no one can tell you. My guess is that with 30,000 agents vying for listings you'll be able to find someone who is willing to tell you whatever it is that you want to hear (and George that's an answer to you as well).

This is what chasing the market down looks like:
https://streeteasy.com/building/superior-ink-condominiums/6e

It's also what delusional pricing in 2012 looked like. I'd say it could sell at $1.5m.

Sold $1.654mm in 2009 and is not brand new any more. I would say $1.7mm.

Unless they lost what ever east facing view they had given the curtains drawn in the living room.

Thanks all for your thoughts.... it is a crazy market and I have to say from my perspective, I am significantly more bearish for the next ~2 years or so than not. The only potential positive for recovery is the vaccine (which is likely not widespread until summer/fall at the earliest). The negatives are far more great, from NYC deficit and how that will affect the quality of life and taxes, rents just getting lower, likely evictions and foreclosures starting up, no international buyers and a very potentially continue economic downturn nationwide. Wanted to hear the varying thoughts, which I am thank for all your answers. We already had our apt on the market and have been debating how low we were willing to sell. In the end, decided a tiny bit lower than we were originally hoping as we will outgrow the apt in the next couple years (and planned to leave nyc for the burbs) to avoid the risk of the either the market getting worse or even just staying the same and dealing with NYC living during Covid until things get back to normal. Thanks again.

nyc, what percentage price discount are you willing to take vs pre-Covid?

300,
While I like what you're trying to get from that question, doesn't it sort of assume the concept of where price was pre-Covid was realistic? I think for some amount of property owners who sell post-Covid they will blame Covid for losses where a non-insignificant portion of the "loss" was unrealistic expectations of value/worth pre-Covid.

If we knew what the property was we could better judge for ourselves.

I know. That is why simply asking about change in expectations of the seller as that is an important part of market price discovery. It might be that expectation became more realistic due to Corona or they were realistic to start with and the seller had to lower it further. I really do not think average trading price is down more than 5% in $1mm move-in condition coop pre-corona vs post-corona but wanted to see what nycbuyer is thinking.

I am not willing to share the exact apartment to keep anonymity (sure you can understand), however, we purchased the apartment for just over $1.1M toward the end of 2018, which we feel was at or right below market value - thought we got a good deal. So, as 30yrs mentioned... it is hard to know what it was worth one year later (just before Covid), from everything I know, the market continued to fall further in that year, so I assume it's market value was just under $1.1 pre-covid. Honestly, I think our apt is worth a little over $1M today, but due to mansion tax and the buyers' market, we didn't think we'd get anyone who would be willing to buy it above $1M w/ mansion tax. Given the fact that we will be outgrowing the apt within the next ~2 years and our jobs don't require us to be in NYC... we feel if we waited, we would be unhappy living for at least the next year in "Coronavirus New York" and maybe will get 1 year of some normal city life after... but to risk all of the negatives I mentioned above and either the market falling more and or just staying the same but to be "stuck" in our box for the next year... we lowered our price to just under $1M and just accepted an offer at that price. So, all that to say, we are willing to take ~10% loss from 2018 and what would likely be more like a ~8% loss from just before Covid if I am right the market dipped a little since we purchased.

Just to add, if it weren't for mansion tax, I think we could have sold above $1M at ~6% loss or so, given comps... but didn't think we'd be able to get a buyer for low $1M in this market and were willing to part ways knowing we'd lose and extra couple percentages than wait and risk losing more. Only time will tell if our decision was the right one :)

NYC, Thank you for providing more details. Here is StreetEasy condo index for Manhattan. Each month corresponds to closing in that month. So Post-Corona contracts will take 2 more month to show up in the data and likely take the index down another 1-2% for the last data point. While individual properties can be very different from the index, the price decline from end 2018 to Pre-Covid call it March Closing, as April closings may have negotiated discounts, is appx 5%. So in your case post corona discount may be closer to 5% if one were to only go by the index.

11/1/2018 $1,134,554
12/1/2018 $1,127,968
1/1/2019 $1,119,701
2/1/2019 $1,111,967
3/1/2019 $1,109,443
4/1/2019 $1,104,507
5/1/2019 $1,104,993
6/1/2019 $1,108,038
7/1/2019 $1,105,657
8/1/2019 $1,098,033
9/1/2019 $1,094,656
10/1/2019 $1,091,791
11/1/2019 $1,092,034
12/1/2019 $1,083,391
1/1/2020 $1,084,071
2/1/2020 $1,078,389
3/1/2020 $1,072,351
4/1/2020 $1,075,493
5/1/2020 $1,071,308
6/1/2020 $1,063,811
7/1/2020 $1,061,161
8/1/2020 $1,051,884
9/1/2020 $1,049,656

nycbuyer20,
I think you are making the right move because I believe holding on for the possibility of slightly more money from a different buyer is well outweighed by the possibilty of a big market correction and losing a pile of cash.

And again sorry for the strident attitude of the post 3 days ago because it seems you were already doing what I was telling at you to do.