The coming collapse/price cuts?

Really? Almost 40% drop in contract volume in both Manhattan and Brooklyn and no one has a word to say about it?

Hi there, been reading these forums (and those at UrbanDigs) for the last year. Recently moved to NYC and very interested in seeing how the RE landscape may be changing.

Why no emphasis on drastic drop in YoY/MoM supply and contracts signed? This that insignificant?

@30yrs do you know what the difference is between asking price and final sales price over the past couple of months?

Urban Digs median listing discount for April was 4.6%

I would love to buy a small additional unit in my building, but sellers of small units that fit the bill do not want to negotiate. In one instance, they want the same price they overpaid for the unit 5 years ago, even though the unit has been on the market for a year with no takers.

I'm willing to bet a non-insignificant amount of those "I don't need to sell" sellers will find at some point in the future that they do need to sell and it will not only be at a time that the market is significantly worse than now, but also at the same time many other of there compatriots will be in the exact same position.

A shareholder in my building just posted one of the most asinine comments I have ever read on our building's electronic bulletin board thinking those who have delisted their apartments for not selling at the artificially depressed prices that we are seeing today. Can't make this stuff up.

*thanking

30yrs
" Almost 40% drop in contract volume in both Manhattan and Brooklyn and no one has a word to say about it?"

I cant speak for April but If I recall looking over the elliman manhattan report for Q1, last year had in the neighborhood of 3500 closings. This Q1 2200 or 2300, cant remember but I believe the average going back years is the 2300 to 2700 range for Q1

Might it have something to do with a way above average of closings last year because people wanted to get ahead of extreme rising interest rates?
If my recollections are correct, than I think its remarkable in this climate there are an "average amount of closings for the quarter.

ugh *then {i think} not than {i think}

Q1 wasn't bad running a bit above 2018 and 2019 (the "worst" years). But then April hit.

April 2019 Contracts 1094
April 2023 Contracts 855

So 23% below the worst.

Yes, so I think Q2 , +- 3500 is the very loose average for several years which falls in line with your 1094

855 is def a big hit to Q2 if it maintains , its not pretty.
But as witnessed from the Lehman collapse, NYC real estate can stay stubborn, sometimes long enough to ride to the next wave up

The difference now is the extreme inflation of everything.....property taxes, facade work, extreme jump(s) of overdue blue collar wage increases in short period of time, loss of substantial amount of high income earners, death of the office building, etc

I gave up predicting shit.....just hedge hedge hedge....if you can

The Streeteasy data dashboard does a pretty good job of showing the collapse towards to Mid 2020 level of activity. By the end of the year you would think somethings gotta give.

Something something markets can stay irrational longer than you can stay solvent. -- JM Keynes

Ali, I think ‘Waiting for Godot’ is more apropos as I can afford to live in my current apartment forever waiting for that Manhattan deal which may or may not exist.

WP I suspect you'll be there two more years.

Although, as I always point out to my clients, if brokers could actually predict asset prices with a reasonable degree of certainty, we would no longer choose to be brokers.

I think there are a reasonable number of us older brokers who make more money buying and selling Real Estate but we don't stop doing brokerage deals.

Hi,
I went to look at a new development in Manhattan and the sales agent said that there are no foreign buyers because of the strength of the dollar.

With the number of active listings on the market at 7,394 - 10.2% over prior month and 1.4% over prior year, it's kindof non-credible to continue to claim that Contracts Signed is low due to supply constraints.

I'm a complete neophyte to re in NYC and am dipping my toe in so what do I know but will add: when I walk around NY on occasional visits it feels like it hasn't fully recovered. Moving around on the subway I can count on my hands the number of times I have had to stand even at rush hour. Walking around the UES and the UWS in the early evening the city feels becalmed. I want NY to feel like its usual bubbly convivial self. Some publications (eg Economist, WSJ) point to taxes in states governed by Democrats so maybe that's playing a role. Anyway, it's sad and I hope it makes a 100% comeback.

>I can afford to live in my current apartment forever waiting for that Manhattan deal which may or may not exist.

@WoodsidePaul were you not in the market in 2020/early 2021? There were some deals to be had then, wondering why you did not pull the trigger then.

@Krolic: We sold our 2BR Queens coop in 2021, so weren’t in a position to buy earlier. Also, my wife was pregnant for the second half of 2021 into 22 and we weren't going to do the COVID restricted apartment tours while pregnant. We rented a larger Sunnyside apartment in the meantime.

@MTH: I dont share your experience with empty rush hour subways. I also think you need to take a pretty rightwing view to think the difference is taxes. There are tax refugees but there has always been some tax flight.

The obvious change is hybrid work. Manhattan offices are 60% vacancy. A lot of people who are in Queens, Westchester, NJ, Brooklyn, etc. who used to come in five days a week no longer are crowding into midtown. A lot of people who own in UES/UWS now live in their formerly second homes and treat every weekend like a four day weekend and sleep in the city two nights to have their three days in office. A lot of workers are in the city but they work from home and don't need to leave their apartment before noon and don't go more than a block from their apartment so you almost never see them on the street.

@ MTH / Woodside: I think it's more about the WFH situation than taxes/politics for the majority of people. As a 2nd homeowner, I'm doing closer to 3 days/wk in NYC than 5. (though being in town 2-3 nights isn't generally enough to do all the things I want to do.) While the tourists are mostly back, the local office workers aren't, based on my walks around midtown, and traffic in stores continues to be down (on top of pre-pandemic declines due to online everything). Jamie Dimon is making noise about putting people back in the office, but then, he has to fill up a huge building in the next couple of years. Other companies are making hybrid working the norm, and cutting back on office space (and the resulting expenses).

The subway is mixed for me - generally less full than previously, but surprisingly crowded some days.

Just one part of the elephant but interesting: Coastal Cities Priced Out Low-Wage Workers. Now College Graduates Are Leaving, Too. https://nyti.ms/3M2qcHf?smid=nytcore-android-share

@Aaron2 How far away from NYC is your second home?

I have thought about buying one within a few hours of NYC, but then I would need a second set of everything, plus a car, plus few extra hours to commute there and back weekly, which makes it seem not worth it. So I am wondering how others do it.

MTH,
Places want to charge $30 for a sandwich and complain "no one wants to work anymore" for $12/hr.

@krolik: Just under 3-1/2 hours, east side garage to barn, in good traffic. It works for my life, and it was literally a life-saver during the pandemic, but as they say, your mileage may vary.

Second homes, regardless of distance are an expensive proposition - renovation, furnishing, maintenance, utilities, garage, car, insurance, taxes, travel time, etc. And with kids it's worse: lots more work to move an infant around (car seats, supplies, etc.), and at some point when they're older there will be family drama when it comes time to leave town, because they have other things to do and friends to see, and don't want to go away.

@30yrs_

True - though I think the article was more about people who are better paid.

I don't mean to sound too disparaging. NY has bounced back before, I just mean it might be a wait. Hopefully in 2 or 3 years new, unforeseen jobs are created as a result of AI and other emergent technologies that require WFO

Back to the topic of the thread, here’s a West Village condo I’ve seen pop up on and off over the years:

https://streeteasy.com/building/morton-square/sale/1569676

The original sale was $7.4M in 2003/2004. Then, current owner picked it up at the “bottom” in 2010 for $7.7M and did some material reconfiguration / renovation. Started listing it for sale in 2017 at $25M. Now down to $11M, with $18.5K monthlies.

On the rent side:

https://streeteasy.com/building/morton-square/rental/4024642

Started offering it for rent in 2019 at $40K but had to drop to $35K to get traction. Showed up again in 2022 at $45K and rented very quickly. Showed up again a few months ago at $45K but has now chopped to $35K, presumably because there was no traction.

Just one datapoint, but an example of the slow degradation working its way into both sales & rental markets at the high end.

I can't imagine spending over $10M on a place with ceilings so low, even the listing photos can't hide it.

Also fascinating to see at this price point its traded essentially sideways for 20 years?

- 7.4M in 2004 sold

- 7.7M in 2010 sold

- 11M in 2023 post renovation ASK, who knows how low it closes

Also fun to look at the monthlies baloon
2007 listing -
$2,168 MONTHLY TAXES
$4,777 MONTHLY COMMON CHARGES

VS 2023 listing -
$11,272 MONTHLY TAXES
$7,230 MONTHLY COMMON CHARGES

So $6945 monthlies in 2007 grew to $18592 in 2023, ouch

I suppose monthlies growth / mortgage deduction cap / SALT cap not helping appreciation.

What do you get in exchange for paying this much maintenance?

Last time around the sellers were actresses. I am curious who owns it now.

Steve, I am guessing that you’re actually looking and 421a exemption phasing out as part of that tax increase.

At this price point, I don’t think mortgage deduction was ever a thing.

For some reason I find the exhibitionist claw foot tub and the askew toilet seat absolutely hilarious

>Steve, I am guessing that you’re actually looking and 421a exemption phasing out as part of that tax increase.

I thought it had to be an abatement also.

The unit is about 4x larger than mine and pays 7.5x as much taxes today. About 1.8x my taxes per square foot, seems not crazy given the unit's fancier location, much newer building, and high floor (I am on the bottom). The question is, why did it pay so little back then?

Re: abatement, very likely yes, going off this..
https://www.prevu.com/blog/nyc-tax-abatements-guide-421a-j-51#
2017 taxes listed at $11k. Prior listing to that was 2010 with taxes listed at $4k. 2008 listing had $2.2k, a 2007 listing had $650?

Taxes in NYC RE are really all over the place.
My WB condo is 20% the size but I pay 7% the tax. Granted they have better floor/view/hood/finishes.
Would imply 3x the value per sq ft.
Nonetheless, units in my condo tend to close for around $1500/sqft vs this units asking $1900/sqft (which it won't likely attain anyway).

On the other hand
My maintenance costs are actually 22% of this unit and keep going up, so I'm getting a bad deal due to small building with 1/3 the units having outside staff costs & an incompetent board.

Wild that they Reno'ed and held for 13 years and are still likely to take a loss, even before transaction fees and insane carry costs factor in.

I feel the need to point out that when 421a first arrived it was necessary because the City was trying to sell lots it owned for $1 and still couldn't get anyone to build on them. Now all it does is increase the number developers are willing to pay to speculators for each buildable square foot. The concept you "need" tax abatements to build is ludicrous when developers are paying 10's of million of dollars for development sites. Money is fungible. Just pay less. Unless you really believe selling tax abated condos is a scam on unsuspecting, unsophisticated buyers.
https://streeteasy.com/blog/nyc-tax-abatements-expiring/

In addition, if you look at actual numbers the taxpayers are totally getting screwed in terms of what we pay vs what we get.

https://ny.curbed.com/2015/7/15/9940480/one57s-tax-breaks-led-to-a-paltry-number-of-affordable-units

https://comptroller.nyc.gov/reports/a-better-way-than-421a/

>> So $6945 monthlies in 2007 grew to $18592 in 2023, ouch

I looked up tax bills, and it was definitely an exemption situation. In 2009, taxes would have been $9600 without exemptions. Doing some triangulation, I’m getting somewhere around $8500 in 2007.

Both taxes and common charge increases are very much in line with the 44% inflation there has been over the past 16 years. So none of this should really be unexpected.

>> I can't imagine spending over $10M on a place with ceilings so low, even the listing photos can't hide it.

I agree, but I bet you can get this one for under $10M. Does that make it better? More seriously, I think the ceiling height is reflected in the price. I’ll say one thing in favor of the housing bubble — developers started building much better because of it.

What should really blow your mind is not paying $10M. Rather, it was asking $25M in 2017. Sure, why not! They had a busted contract in early 2022, but at this point I’m guessing it’ll rent — at a 1.8% cap rate based on asks.

>> Last time around the sellers were actresses. I am curious who owns it now.

Bruce Eichner, a developer with a history of fine buildings but magnificently poor timing.

"Bruce Eichner, a developer with a history of fine buildings but magnificently poor timing."
So he's whistling a different tune now? (Another joke no one will get)

One of the articles 30yrs posted linked to this condo unit: https://streeteasy.com/sale/485916
and I am just puzzled by the price trajectory. Mere 1.3m (for a 2k sq ft 3/3) then vs listed at 6.5m now after the tax break expired?

In that building I'm guessing the higher priced listing is for some insane/infeasible combination because the sale was for a 1,050 SF unit. Remember the article?