Urbandigs: Market continues to improve -Mar 23

https://www.nytimes.com/2021/04/04/nyregion/soho-gentrification-racism-wealth.html

This article has more specifics.

Hi Admin,

Per Elliman/Jon Miller, Manhattan 1Q 2021 2457 closed sales + (807 + 526 + 19)= 1352 signed April contracts
vs. 1Q 2020 2407 closed sales + (38+19+2) = 59 signed contracts (there's the Pandemic for you; I fought my way to one of these, and it was a hard fight).
So by my math 3809 (though we're assuming everyone gets board approval, which is not really reasonable) vs. 2466; volume up 54%.

For pricing the only published data Miller has is 1Q 21, which shows a Covid discount of 9.9% y-o-y.

I can tell you from being out in the field that's declining. I think it exists still, but it's getting smaller by the minute. Manhattan buyers should buy because they want to be here, and money is cheap, and they're getting a small price break, not because they think they're getting great bargains.

***

Brooklyn 1Q '21 2,822 closed sales + 168+ 326+145 signed contracts for April = 3461
vs. 2525 closed sales the prior year + 37 contracts (across the categories) = 2562,
so volume up 35%. It would be greater, but I can tell you I've had clients hit the listing price and then seller has subsequently decided not to sell. @Keith may have these stories too.

Miller doesn't have enough ppsf data to really quantify Brooklyn's pricing trends. The one place he has it is condos, which show that same Covid pricing discount of 10% psf 1Q'21 vs 1Q20.

HOWEVER, average and median co-op sales prices for the same period are both up by more than 25%.

So Brooklyn may or may not even have had a Covid discount across all property types; it's tough to tell.

There's sure not one now. I will tell you anecdotally from April, the easiest way to price something desirable in Brooklyn is to decide what it would have sold for last year and bump that up by 12% or so.

Pandemic slammed a lot of people, including me, but people without small kids who could do their jobs on TV had monster years, were rewarded with giant bonuses, and they're now crawling all over each other eyeing real estate.

ali r.
{upstairs realty}

@ali sellers deciding not to sell has not been the issue. Frequently being outbid even when presenting very strong offers and in a few cases all cash.

Submitted a bid on a new development in Boerum Hill today. It will be interesting to see what kind of response we get. We've probably submitted 20 bids in the last 30 days on Brooklyn properties, maybe about six have been accepted, two including a townhouse are working their way through due diligence right now!

You definitely have to have a lot of patience. And we're back to a point where it can be very difficult to get listing agents to even return your call even after submitting an offer! 9 months ago when we had many buyers looking and submitting offers in Brooklyn I was treated like royalty! Now getting a slot at an open house can be as difficult as securing a ticket for Hamilton when it first opened! Happily we have very good relationships with many of the best brokers in Brooklyn, I remember when the shoe was on the other foot we were humble and easy to work with.

Taking it back to the first pandemic, Urbandigs Vlog:

https://youtu.be/rq8jfPGWaBY

Bloomberg: Billionaires' Row Condos Defy the Odds With Profitable Resales.
https://www.bloomberg.com/news/articles/2021-06-07/billionaires-row-condos-defy-the-odds-with-profitable-resales

Continued momentum in the 4 million and above Market according to the Olshan report. Townhouse sales leading the way:

Mansion Global: Manhattan’s Hot Luxury Housing Market Continues to Simmer.
https://www.mansionglobal.com/articles/manhattans-hot-luxury-housing-market-continues-to-simmer-01623084797

Manhattan market pulse at 78 despite De Blasio oblivious to QOL issues. What happens to Manhattan real estate if Eric Adams gets elected?

Is it just me, or do UrbanDigs videos seem to have an agenda that they don't even hide, wishing prices on rents and properties in NYC go up ASAP?

Misleading statistics. For example, properties in contract number is used for their market pulse metric, but according to my banker, increase in contracts is also due to banks / mgmt taking longer to close ("due to COVID"). Rent prices they quote do not include concessions? Then they are overstating rents by 10-25%, and understating pandemic discounts. Leading the witness. "Would you agree the rental market shot up like a rocket?" - they ask an interviewee.

Flip side of housing prices not going up is increased housing affordability. Why not celebrate that?

We have not seen any meaningful delays in closing for the last 6 months. Initially when we were doing remote closings there were certainly some snags. We're not seeing that any longer, for the most part closings have normalized. At least that's been our experience, and we currently have over 20 deals in contract, and quite a few deals done this year. So it's based on our actual experiences, though these may not be the same as yours.

All that said, it's not like the closing process with co-ops has ever been an extremely efficient process.

FYI: I'm still out of the country, and it's been pretty cool traveling again.

Keith

A peek at what we've been up to:

https://www.theburkhardtgroup.com/transactions

UD overhypes the market for the same reason everyone in real estate does. Nobody benefits from housing affordability, at least nobody that anyone cares about. Everything about real estate is driven by people with a vested interest in rapidly rising prices. Last year we called this an example of structural racism since it tends to be white people who own/sell stuff and black people who buy or rent. This year we resume regularly scheduled programming.

Lol, this is a new level of reach for George to fit his NYC bear market narrative. RE bull markets are now racist!

UD relays and contextualizes the market data, they’re not pumping anything. I doubt you actually have watched the recent videos, as if you had you’d certainly have noticed them pointing out “flashing sell signals” in the Manhattan market.

72% of whites own a home (myself included) whereas only 42% of blacks do. The average white person over 45 has $105k of home equity, compared to $25k for the equivalent black person.

With nationwide HPA at 24% YOY, who does that benefit? Who benefits from rising home prices in Manhattan? You tell me. Then tell me why higher home prices do anything but exacerbate inequality.

As a homeowner, I'm thrilled that the Zestimate on my house is up 50% since I went into contract a year ago, double the national HPA. But I'm despondent that this is also making my area more exclusive (a word realtors love- racism in action.)

Maybe instead of scrubbing floorplans for the word "master", realtors could set about encouraging lower prices and hence more inclusive housing in expensive areas. That will be the day.

Or maybe owners could sell properties significantly below the market to benefit those priced out of the neighborhood?

I personally think real estate agents/brokers have very little influence on market direction. However buyers / sellers could take things into their own hands if they wanted to be a bit more equitable.

search chelsea, there are very limited inventory with prices all over pre-covid level, the market really shot up like a rocket. of course not because economic is any better , but only due to money being as cheap as toilet paper

It's a good report to follow for those following the $4mn + market. Along with Jonathan Miller's market matrix and urbandigs. Helps separate the opinions from the facts, if you're buying or selling a home.

https://olshan.com/marketreport.php

So resales market pulse at 85. Do the prices follow with a modest 5 percent increase from the bottom in 12 months since the bottom of Street Easy Price index?

Easily, I think.

Interest rate alert: Citi 1.75%, 10-year arm, preferred relationship.

Happy Labor Day!

Keith

Wow. Guessing you can get 2 percent in the market for 10/1 ARM otherwise if you open bank account with the lender.

Keith, What percentage increase you are seeing in Manhattan resales market roughly since the bottom - just gut feel.

Nada, I am thinking even 7-8 percent wouldn’t be any surprise due the spread between Manhattan resales and Non-Manhattan has narrowed - let us say by 20 percent using national HPA. There is going to be some drag as some of the $3k plus per sq ft new developments become resales and in that segment, I am not sure what the bottom is or will be.

To be clear, that 1.75% 10YR ARM is interest only? So a $1MM mortgage = $17,500 per year until the loan resets after 10YRs?

I think it's difficult to generalize about a percentage increase in the overall Manhattan resale market. Each submarket is substantially different.

You're probably better off looking at a site like Urbandigs to find a meaningful, somewhat quantifiable number.

Keith, You tend to see changes before it shows up in the data. Digs price data is not very helpful as it doesn’t compare like sales. It is just market average sq ft price or discount to ask. Also these statistics are 2-3 months delayed.

Noah has actually been putting together same-home resale index for UD. Here's a preview:

https://www.urbandigs.com/forum/index.php?threads/liquidity-back-to-2015-resale-pricing-back-to-2019-heading-higher.489/post-3619

When I called the strong Market in Brooklyn, it was just blatantly obvious based on our experiences. And for the most part it was across the board on what I call REBNY member Brooklyn, for lack of a better description. We also noticed the trend of buyer's settling in Brooklyn and treating it like a 'suburb'.
Although we recently signed a contract on a 3.7 million dollar house in Bay Ridge, we cast a large net! Meaning a lot of non-rebny member brokers manage many of the listings in Bay Ridge, like other Brooklyn neighborhoods, that's starting to change.

I would say the Manhattan Market has continued to show strength especially through these seasonally slow months of July and August. I think we have about 23 deals in contract right now, that's significantly more than we would typically have had this time of the year.

All of 'our' listings are in contract, and all went into contract at ask or above relatively easily with the exception of one, 22 Warren Street. It was one of those homes that just needed to find the right buyer, the answer was not to reduce the price, it was to be patient. And we did find the right buyers.

Keith
TBG

As a total anecdotal aside, we recently had two appraisals in Manhattan miss the mark. In both cases we were able to renegotiate and get back into contract at a reduced price.

On one of the listings we certainly all agreed it was a very sloppy appraisal with poor comps along with poor adjustments. This was in the Lincoln center area. This one became a little complex, we were able to get a reduction based on the appraisal and get back in contract. Then we had a board turned down and threw a little detective work realized it was because of the price point. We went back to the drawing table, renegotiated and our clients received board approval a few days ago. This is a building to clients we're very familiar with, and had been bidding on and watching apartments for at least 2 years.

The other unit was in Murray Hill, similar situation with clients that love the building and had been watching/bidding for at least a year. In this case we all agreed we were paying a premium, although one they were comfortable with, especially factoring in the commission rebate. We were able to successfully renegotiate and get back into contracting at a lower price.

Apologies for the spelling, grammar! I'm a slave to talk to text...

@anonymouse- Conventional

Kind of interesting piece in browstoner, following the path of a few properties over the course of 6 months.

We assisted with the purchase of 35 prospect place. I thought it was a beautiful home even in its current, original condition. Love the wallpaper, although I wouldn't want to live with it.

https://www.brownstoner.com/real-estate-market/brooklyn-homes-for-sale-sold-comps-clinton-hill-flatlands-park-slope-flatbush-101221/

Is it possible to sell a minority stake in a rental building ?
If you own 10% of an LLC with 150 apartments, is that a desirable investment for anyone ?

Market Pulse at 37!
https://youtu.be/4NXbeuyxP9I

Not looking good. Wall Street contracting, VC funding for start-ups tightening, crime increasing… - only saving grace would be falling mortgage rates. Do we see that happening?

Curious - Noah comes across as a bit of a used car salesman “Buyers! Buy now! This is the window!” Is he supported largely by the brokerage firms?

The one thing we know for sure, the market goes up and down. I'd rather be buying in a falling market than being involved in a bidding war with six buyers. No one can accurately predict a bottom.

Is there not a better time to buy than when real estate / stocks are on sale? My equity portfolio is down 27%, certainly it's painful but I've been here before, if I had more deployable cash I'd be buying stocks. For peace of mind I like to keep a relatively high cash reserve.

Don't be afraid to buy when everyone is running for the doors, I love a good sale. Be patient, as I mentioned a few months ago when nada asked for predictions, we're heading for a buyer's market. Look for maximum fear, maximum doom and gloomers coming out of a closet....

Keith Burkhardt
TBG

It seems like your advice is "buy when the market is going up, buy when the market is going down. Just keep buying"?

You should buy a home if you prefer to own a home. Don't you work in a real estate office David that sells real estate year round?

We don't tell people what they should or shouldn't do, they contact us after they've already made the decision to buy and then we assist them through that process. One of the things we do is rebate up to 67% of the commission we receive back to them right after closing. However we don't make any decisions for them on whether buying or renting is a better choice for their particular needs at any particular part of the cycle.

My opinion on this thread is simply my opinion. As an educated adult, you should make the decision when and if you're going to buy a property.

Keith Burkhardt
TBG

>> Curious - Noah comes across as a bit of a used car salesman “Buyers! Buy now! This is the window!” Is he supported largely by the brokerage firms?

I didn’t hear that. Noah is a person who gets excited about market dynamics, seeing how sentiment is shifting, and having data to back it up. He built a business around that passion, to deliver real-time data on that sentiment. If you were listening to him 3-6 months ago, he was telling sellers to get it done before as sentiment was shifting (backed by his data). Now he is saying the market has shifted towards buyers with respect to sentiment, negotiability, even though it hasn’t yet shown up in price.

Just to add my 2c.

Real estate brokers are not people's financial, investment advisors or asset allocators. NYS issues a license called "Real Estate Sales Person" who is supervised by a "Licensed Real Estate Broker". I don't see anything in the responsibility below which is advising buyers and sellers on the direction of the market.

"A Real Estate Salesperson, under the supervision of a licensed Real Estate Broker, facilitates the purchase and sale of property on behalf of customers, obtains lists of property for sale with employing broker; assists buyers (customers) of real estate to locate and purchase property (listed with employing brokers or another broker). A real estate salesperson is associated with a real estate broker to list and negotiate the sale, lease, or rental of real property for others for compensation, under the direction and guidance of a responsible broker. A salesperson cannot operate independently."

https://dos.ny.gov/real-estate-salesperson

>> Is there not a better time to buy than when real estate / stocks are on sale? My equity portfolio is down 27%, certainly it's painful but I've been here before, if I had more deployable cash I'd be buying stocks. For peace of mind I like to keep a relatively high cash reserve.

Do you think RE is “on sale” at the moment? Stocks? I kinda think it’s gonna take a while (at least a year) for RE to really go on sale. Stocks harder to say IMO — could happen at any moment.

Difference between bottom fishing RE and stocks is you can dollar cost average your stocks very minutely given low/zero transaction fees and single share (in some case fractional share) transaction size limits.

RE unless you are very wealthy and in a lot of cash, you are essentially making a single big block trade, with high transaction costs on the way in/out, holding fees, and interest rate risk unless you are buying all cash.

steve123,
When I have been in "buy mode" I averaged 1 a month.

If you look at the last two downturns in NYC RE, the bottoms came in about a year after the stock market bottomed. Has the stock market bottomed yet? Maybe, maybe not. Has a year passed since the bottom? Most definitely not.

The SE index seems to have peaked in Aug 2022, reflecting 2022 Q2 closings. It seems premature to talk about a buyer’s market when the (few months lagged) print is just peaking.

The current state of affairs in NY RE is gonna be interesting. The tide of loose money has gone out.

There are people I know whose net worth doubled over 2020 & 2021, but then halved in 2022. So back to where they started after the boom years in nominal terms, but down 15% in real terms. They’ll be fine financially — plenty of money to begin with — but a hit to one’s ego to have lost half your money, if you’re not emotionally equipped to deal with the ups & downs.

Others doubled over the two years, and continue to have another banner year at the same pace in 2022. And of course lots of people in between.

The dispersion of outcomes is very reminiscent of how post-2008 was shaking out. Those who were levered to the bubble-du-jour (housing) couldn’t do much other than hang on. Those who weren’t had opportunities. The recent bubble-du-jour (ZIRP) seems to have ended, so it’s gonna be interesting to see how it all shakes out.

@nada, happy to take introductions to the people who keep having banner years -- or even the in-between people.

ali r.

@Inonada - seems like a perfect storm of headwinds against housing

The everything bubble has popped
Any lump sum kept in stocks has gone down 25% or more from peak
Crypto and other "alts" destroyed, down 70-90% from peak
SPACs are done

Any equity in existing RE that might have gone into a trade up has gone down/is illiquid

Tech stock based compensation has been wrecked, hiring frozen, and jobs cut
Wall Street bonus cycle going to be down this year plus resuming annual layoffs

Foreign money has dried up with China/Russia relations in the gutter & strong USD impacting European buyers.

Interest rates have more than doubled where we've been in recent years, means even trading sideways is significantly more expensive on a monthly payments basis

Have we bottomed in stocks - more likely no than yes.
Are we a year out from the bottom.. check back Fall 2023!

On the Urbandigs market pulse - is there any description of the methodology? What I don't get is why the central "neutral market" 10% band is not centered in the 0-100 range, nor centered around the historical min/max range. Against either of these ranges it seems arbitrarily biased to offering more range to sellers market than buyers market..

On the Market Pulse: there was a recent change where the length of time a listing has not been updated but still gets included in Active Listings was increased. This led to an increase in number of Active Listings and lowering of Market Pulse. So the range of where Buyer's Market vs Seller's Market changed. But I'm not sure the stated boundaries aren't somewhat arbitrary. Perhaps the best thing is to look at a graph of Market Pulse history and choose for yourself based on the levels you see and your own opinions of past markets.

Regarding how long the Real Estate market takes to react to financial shocks:
Black Monday was October 1987. Volume went down but prices didn't change much until 1989. Market didn't bottom until 1992 (this is for NYC).

OTOH certain people who were all about "look at what Market Pulse is! That's the indicator! Woo hoo!" in the past are oddly silent about it now.

Thanks @30 - I appreciate the candor and I think this makes sense "Perhaps the best thing is to look at a graph of Market Pulse history and choose for yourself based on the levels you see and your own opinions of past markets."

As always, people change what scoreboard they like once the score changes!

@nada I previously wrote here we'd be seeing a buyer's market in early 2023, Where the bottom is going to be, nobody knows. Under the circumstances it was an easy call, even for someone who doesn't listen to or make short-term predictions about markets. It's a fool's errand.

My emotions are in check because I've been through this dozens of times. The market goes up and down.

This is why I'm careful to allocate money to any of my investments that I can stay committed to through difficult times. Sure, it sucks to be down $500k... But as they say, it's only a loss if I sell. Who knows when the next bull cycle will begin, in the meantime I stay invested. And if anyone here really knew which direction markets were going in, it wouldn't be wasting their time chit-chatting on a real estate forum. @nada quite honestly I feel fortunate that you post here, why you give any of your time here that has me scratching my head! You're in an entirely different League...

Regarding my primary residence, I don't view that as a pure investment. Although because of where I live it's done significantly better than my stock portfolio over the last year.

Every bear thinks they know what they're doing when the market goes down and every bull thinks they know what they're doing when the market goes up. For me it's a marathon not a sprint. And both bears and bulls go quiet when the market doesn't match their animal. I just accept what is and roll with it.

The thing with a primary home purchase is sometimes the timing of your life doesn't always match the best timing to buy in the market. I've said this dozens of times on this site. So you have to make the decision that's best for you and your family regarding whether you want to buy or rent or move to Loxahatchee!

In 2021 we closed out the year with $2.6 million dollars in commissions earned. We went into 2022 with approximately 10 other deals in contract.

Year to date we've taken in 1.7 million dollars in commissions, with approximately 8 current deals in contract.

The market has slowed. Yes it's different than a year ago, and it will be different a year from now...

Another thing to keep in mind, I only work part-time. I haven't met a client face to face in 11 years. 98% of the clients that we work with come in through a personal referral. Maybe 2%, and that might be generous come in through this forum.

My current investments now generate enough money for me to live on. The Burkhardt family will be spending the summer in Portugal, possibly hunting for our new forever home. Dollar is strong and prices are now falling there as well. We'll see...

I created an efficient business model that has now been somewhat widely copied in New York City with other people essentially following the blueprint that I created. I take it as a great compliment. We have a simple model that works very well, and I attribute that to our great success along with the wonderful people I have working for me in NYC. That said I do enjoy speaking with current clients and new clients on the phone.

www.theburkhardtgroup.com

Enjoy the markets!

Keith Burkhardt
TBG

I hear what Nada is saying about real estate bottom lagging stock market bottom in 2008 which I happened to time reasonably well by sheer luck and life circumstances in 2011.

What Keith says below is equally important and if you are picky about the location and type of property, it is not always available for you to time perfectly. Then there is tight rental market right now suggesting underlying housing demand being strong. If course, rental market can turn if there are mass lay-offs.

"The thing with a primary home purchase is sometimes the timing of your life doesn't always match the best timing to buy in the market. I've said this dozens of times on this site. So you have to make the decision that's best for you and your family regarding whether you want to buy or rent or move to Loxahatchee!"

I am wondering if there are people thinking that they could have saved 25% decline in equities and kept the proceeds in cash to look for the right place for their family. Or people like Mouse, who could bought in the right location instead of renting and locking in low rates at that time.

I thought about that this year 300, knowing the real estate market will be going down, there's a particular property I'm looking to buy for family.

The other thing I find interesting is criticism that I sometimes hear. I'm not standing on a corner grabbing people and shoving them into my office and making them sign contracts. Anyone that's ever worked with us knows we never try to sell you anything. Sounds strange but that's how we work.

We don't do search for our clients, they find properties that they're interested in seeing and then we schedule the appointments and accompany them to the viewing. We blind copy clients on all communication with listing agents, or at least most of it. Many clients don't want to be copied on all the back and forth for scheduling etc.

You ask us for an opinion on the property, and we present it to you based on current data along with current market conditions. We send that to you, if you're interested in bidding we help you put the offer together. If you're not you won't hear from us. We also don't follow up with clients after showings, if you have a question or interest, we assume they will be in touch with us. We will share emails with our clients from listing agents asking feedback.

It's a very efficient process geared towards not being annoying to the client. And because of this process and efficiency we're able to rebate back a significant portion of our commission to our clients. On a $3 million dollar transaction you will get back $60,300 from us assuming a 3% Commission.

Very few clients have any issues with us, occasionally disgruntled conventional brokers do. However we're just as transparent and straightforward with the brokers/agents we work with, and the vast majority of them appreciate that. At the end of the day we're not costing them any money, and they're looking to get a deal done.

Since I post here quite a bit, and I am a broker I just wanted to be transparent about what we do and what I've created.

Keith Burkhardt
TBG

While not NYC, good article. I notice in most cases, it seems that there was frenzied buying before the recent decline as reflected by YOY price increase despite decline in the last three months.

https://www.realtor.com/news/trends/house-prices-are-dropping-heres-where-real-estate-is-declining-most/

300>> I am wondering if there are people thinking that they could have saved 25% decline in equities and kept the proceeds in cash to look for the right place for their family. Or people like Mouse, who could bought in the right location instead of renting and locking in low rates at that time.

I have pondered this question too.

Do I regret not buying two years ago? Not really. I would have been a buyer had it not been for a few factors. The cap rates for what I’d buy are low. Even with the recent bounce in rents (which has been higher than I’d expected), the current cap rates are not particularly attractive compared to old mortgage rates. Cheap mortgages were not that attractive to me either: I have plenty of capital and am constrained by risk, not cash / leverage. While I did not find stocks and bonds attractive, I had better alternatives. These vastly outperformed even my healthy, double-digit expectations. Stocks (flat since 2020) and bonds (down 20%) underperformed my meager expectations. Finally, I was concerned about the hit RE would take from rates if/when the Fed removed its pandemic-era ZIRP and bond/mortgage buying spree. Although we have yet to see it in RE prices, rates have ended up much worse than I was expecting, so I expect the other shoe to drop harder than I’d expected.

Had I been in a more “normal” situation, I’d have been a buyer. Higher cap rates. Less capital / more need for leverage. Stocks & bonds as only investment alternatives to RE. These would have tilted me to buying using Fed-subsidized rates with a 30yr fixed, despite concerns about the hit to RE prices once the Fed took the punch bowl away. And had I not bought, I would probably regret it now.

Keith>> @nada quite honestly I feel fortunate that you post here, why you give any of your time here that has me scratching my head! You're in an entirely different League...

For fun and profit. I enjoy hanging out with this motley crew, and I learn a lot from everyone’s perspective. Besides, it’s either this or scroll through Instagram like a teenage girl.

Nada, For your ultra-luxury segment, I agree that it still does not make financial sense to buy if you can find something you like for rent. This is despite 20-40% decline from the peak in selected ultra-luxury properties call it >$30mm. However, some rich people wouldn't rent and actually want to live there at least a few months a year. For them it makes sense. After all, many of these people buy $10mm++ art-work too where the resale commission can be 20% plus and there is really no concept of value.

If you are pedestrian Manhattan rich (still rich by most standards) looking for $2-4mm resale coop/condo apartment in less than $1500 per ft segment in good location and you are selective like Mouse, buying would have been much better. Caps rates for this segment are still not that good - perhaps 3%. Of course, someone like Mouse could have shorted equities at the peak.

Here is an example of reasonably priced rental if you are fine with basic luxury clean finishes and standard post war 8' ceilings.
https://streeteasy.com/building/185-east-85th-street/22ef

Then there is this one if you want fancy finishes and better location. Probably will rent for $25k. If you want finishes like this, the choices are limited in that area.

https://streeteasy.com/building/60-east-86-street-new_york/rental/3958995

Sales listing. Probably will clear $2mm less than ask. You can't really get the peak new development near ultra-luxury price.

https://streeteasy.com/building/60-east-86-street-new_york/sale/1607909

Unfortunate choice of layout on E85th /22EF, with that wasteful twisty hallway leading from the dining area to the bedrooms. As a result, there's no clean way to fix the small kitchen, without either losing the 1/2 bath, or having it open into the kitchen, or get a larger dining area. There are probably immovable things in the common wall between the units which forced this choice, but that's where better forethought by the architect at the design phase would have helped. (H.I. Feldman -- he certainly cranked out the buildings though. See his obit in the NYTimes, 27 Jan 81)

It is a forced combo of two large 1 bed room units which I think were well designed but rental market yield maximization is in cramming more bedrooms into smaller spaces.

https://streeteasy.com/building/185-east-85th-street/15e
https://streeteasy.com/rental/2162745

I think they want to keep the option of converting it back to separate apartments easily.

"@nada I previously wrote here we'd be seeing a buyer's market in early 2023" is not a prediction and
"Is there not a better time to buy than when real estate / stocks are on sale? " is not a buy recommendation.
Got it.

That was a little wager that nada goaded me into since I bested him last time : )

For full context please read through the whole thread for those following along.

https://streeteasy.com/talk/discussion/47187-manhattan-market-prognostication-2022

Throughout the thread I post data from Urbandigs, the Olshan report to support the deteriorating market that we were experiencing beginning about 6 months ago as the market shifted.

Steve - the UD market pulse is a ratio of active supply to pending sales in contract. For active supply, we count any listing set to active and updated at least once in the last year. So there is a batch of stale listings unfortunately included

The neutral zone range is determined by a 7 year median of data points and then standard deviation above and below to determine thresholds. To us, this formula matched the market movements in the closest way.

Steve - the UD market pulse is a ratio of active supply to pending sales in contract. For active supply, we count any listing set to active and updated at least once in the last year. So there is a batch of stale listings unfortunately included

The neutral zone range is determined by a 7 year median of data points and then standard deviation above and below to determine thresholds. To us, this formula matched the market movements in the closest way.

Conforming
Loan Type MI Type Interest Rate Discount Points APR
Conforming 30-year Fixed 6.750% 1.000 6.906%
Conforming 5-year/6-month ARM 6.250% 0.875 6.007%
Conforming 7-year/6-month ARM 6.125% 0.875 6.018%
Conforming 10-year/6-month ARM 6.500% 0.625 6.321%

Jumbo
Loan Type MI Type Interest Rate Discount Points APR
Jumbo 30-year Fixed 5.625% 0.875 5.715%
Jumbo 15-year Fixed 5.375% 0.750 5.507%
Jumbo 5-year/6-month ARM 5.250% 0.875 5.570%
Jumbo 7-year/6-month ARM 5.250% 1.000 5.537%
Jumbo 10-year/6-month ARM 5.500% 0.750 5.622%

wf

So Wells Fargo on 10/14/22 basically below 5.50% for 30y and below 5.25% for 5y ARM with some relationship discount which most people manage to get. And if Fed's projections are to be believed, inflation and fed fund rates will start to come down in 2024 allowing people an opportunity to refinance lower after say 18 months of higher payments.

https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20220921.pdf

And don't worry about appraisal issues because Real Estate never goes down.

30, What do you think is the most likely change in price of real estate in NYC if the rates go lower vs today?

What do you think the most likely change in price is going to be as mortgage rates continue to rise after already doubling?

Did you realize that re-financing scenario is only if the rates go lower. Otherwise why would you refinance?

Past performance no indication of future performance but ...

We have seen this movie before and know what it's like.

Three-quarters of the inventory is now not gonna move (I spent most of my morning talking my way OUT of being the listing broker on a Sutton Place estate-condition unit, on the grounds that I'd rather do almost anything other than spend two years hitting my head on a wall.)

One-quarter of the inventory is going to be the "only" inventory showing up to buyers who will have bonuses rattling in their pockets, and the choices of spending it on high rents or putting it into a volatile and probably continuing-to-drop equity market.

So that stuff will sell, probably at prices that are current (or at least not significantly lower), while the bottom drops out of volume.

Since brokers won't be doing much volume, that will give us all plenty of time to have the "the world is going to heck, why aren't prices dropping more?" discussion.

ali r.
{upstairs realty}

Good point Ali.
While I think the market is clearly down from earlier this year by 5 percent plus in resale less than 1500 per sq ft, I find further decline in market hard to predict due to strong rents in basic doorman luxury Apt and uncertainly about rates. Who knows if we are at peak Fed hawkishness? Ultra-luxury I think still has a lot more room to come down depending on the property.

That's right 300, who knows what the market has in store for us. After the Lehman crash everyone was very surprised to see the market come roaring back, same thing after covid, 9/11...

I see your "mortgage rates are poised to drop" and raise you 8.5%
https://therealdeal.com/2022/10/14/mortgage-rates-could-continue-rise-to-8-5-nar/amp/

At least Bank of England admitted it was all about finance rather than some paradigm shift.
https://positivemoney.org/2019/09/bank-of-england-confirms-positive-money-analysis-of-house-prices/

So will we see more trillions in stimulus, QE, ZIRP etc? If not I'm not sure what is going to support the market against a larger price correction.

Ha. First comment on the 2y old article.

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Avatar
Chas999
2 years ago
This article is simply nonsense. Cheap money is available across the western world but housing is uniquely expensive in the south east of England. If you were up here in Scotland where I can buy a two bedroom flat nearby for £62,000 you would not write this rubbish. Whoever wrote this has obviously never been further than 80 miles from London. The difference in the housing market between London and the north of Scotland has everything to do with supply and demand and nothing to do with the supply of credit.

If you think low supply and people locked in to their low rate mortgages is saving the market, check out Urban Digs new supply post Labor Day this week.

I wish that Noah and John still did the videos. I am guessing the Labor Day listings are lower than the past few years?

IDK about volume, Woodside.

As far as price, I have two units that I think I am absolutely fire-sale-ing, and the response on both is steady but frankly lighter than I thought it would be in both cases. Sunday is first OH for both, and we'll see what the reaction is of those first people in, and whether they're primed to buy.

It's a little bit of weird season because the Jewish holidays are "early" so next weekend may get eaten by Rosh Hashanah and the weekend after by preparations for Yom Kippur... we won't really have a sense of the fall market until the end of September.

Also, were you the one interested in 50 SPS? FYI, I have an estate there I'll be selling in a few months.

ali r.

I was looking at 35 Sutton

WoodsidePaul,
The videos are still done weekly.

Hi Woodside

We still do video updates every week on Friday for Manhattan and Brooklyn, we just added it as a subscription feature for our users earlier this year

We do weekly macro Monday, weekly workshops and got a buy side research note in the works for this coming week

All the best
Noah

The weekly pace of new listings in Manhattan as of today was almost 700. By contrast the entire month of July was 990.

At the current pace Contracts Signed Manhattan for September will be the worst since ____________.

What is it at currently month-to-date?

441

Yikes!

But let's talk about how the problem is those nasty poors not being evicted instead.

575 Contracts Signed for Manhattan is September. Is this the worst September in history?

September newsletter for one of the Big Five Firm's Top Ten Teams:
Family wedding/Team member vacation/Team brainstorming/Listing Price Drop/Team Member Birthday.

hey, you guys sell any apartments???

https://www.bloomberg.com/news/articles/2023-10-12/manhattan-apartment-hunters-finally-get-a-break-with-falling-rents

One reason why no one should expect a bargain in the rental market Is that when supply sufficiently increases to merit cutting prices, owners collude to keep massive amounts of making departments off the market, tipping the scales.

One reason why no one should expect a bargain in the rental market Is that when supply sufficiently increases to merit cutting prices, owners collude to keep massive amounts of making departments off the market, tipping the scales.
https://www.urbandigs.com/forum/index.php?threads/is-the-rental-market-going-to-crash.74/page-4#post-2607

Same phenomenon with sellers!