Why are NYC buyers so unrealistic?

You mean NYC sellers are unrealistic then, no?

Sorry, yes, I meant the buyers. How is over one year on the market okay?

Amazing that Krolic can’t stop saying buyers when the sellers are irrational.

I hear you, I have made an offer on a place and they are pointing to comps for the price they are looking to get when they have been on the market a year plus and clearly are not able to get that price.

I think a big differentiator in Manhattan vs rest of country is that there are plenty of sellers who don’t need the check to hit their account right away (elsewhere most people need the money to secure another place to live) and there are a handful of buyers who have the resource to pay above market prices if they really want a certain place which tempts sellers to hold out.

Fewer people in NYC are actually motivated sellers? I.e., they'll test the waters, but don't really want to move unless they get a great offer (where 'great' probably = unrealistic). I think you see some of this in the units that have been on and off the markets over the years.

Deep pockets. I've had clients like this -- assume that first, the sales price of the unit is not as significant a part of their net worth as it would be, say, of mine, and second, that the cost to them to carry the unit is fairly minimal, so why not wait until the market is less lousy, even if that takes ... a year, or two, or three?

I think there can be mismatches between your’s and others’ view of price outlook, benefit, and the cost of capital.

Suppose I’m a seller who considers the cost of capital 0%, because that’s all the bank pays me. Second-home usage, however infrequent, offsets cc + taxes. Do you know expensive an equivalent hotel room would be? And prices will go up because … . So why should I cut my price? And why should I delist, the right buyer might come along at any moment in time, and it doesn’t cost me anything to stay listed.

If an owner has paid down their mortgage or is sitting with one at sub 3%, which I'm guessing is most NYC owners, the level of desperation is low. Yes, maintenance and cc's are creeping up, but not so painfully.

On the other hand, the alternative for a buyer is to rent, which has indeed become substantially more painful over the past couple of years.

LOL, sorry about the buyers thing.

>I think there can be mismatches between your’s and others’ view of price outlook, benefit, and the cost of capital.

It is not just my outlook and cost of capital. If a place is on the market for a year, other buyers presumably have a similar outlook. But why are sellers not moving on price? In the rest of the country they move much more quickly. Maybe people that bought were the people whose cost of capital is particularly low, and outlook on NYC particularly bullish?

The more expensive and complex the market, the longer the market times. A suburb with rows of cookie cutter houses for $300k with no coop boards has a very efficient market. Everyone knows what any particular house should cost. Further, the value to a realtor to take an above market listing is low: 3% of $300k is a lot less than 3% of $3m.

>> In the rest of the country they move much more quickly.

The rest of the country continues to have low historical inventory:

https://tradingeconomics.com/united-states/total-housing-inventory

Moreover, sellers elsewhere are not dealing with loss aversion. To a lot of people, the headline price they bought / sold carries a lot of meaning, more so than any sort of proper financial accounting.

Look at Case-Schiller, and you’ll see that buyers at any point in the last 30+ years are comfortably “up” in both nominal and real terms. In NYC, buyers from anytime in the last ~10 years are flat or down in nominal terms. In real terms, buyers from anytime in the last ~20 years are down. That creates psychological pressure against selling at market price.

>> Maybe people that bought were the people whose cost of capital is particularly low, and outlook on NYC particularly bullish?

That certainly jibes with what I’ve seen on this forum. I recall many lively debates here on those topics 10-15 years ago. Some people put their cost of capital at 0%, because that’s what banks pay, and they were unwilling to invest their money anywhere else. They also put expected rates of appreciation at 4-5%/yr. Try as I might, I couldn’t dispel them of either notion as being poorly-founded.

At the end of the day, this is what having a market means. You have your parameters, others have theirs. If there’s a meeting of minds, you have a transaction. If not, you don’t. There’s no sense getting frustrated by it. If you think the market’s got it backwards, reassess and act accordingly.

And everything that George said…

There are close to 70,000 Real Estate Agents in NYC and rather than specializing in small geographic areas or even types of properties, very many pretend to be experts in everything, everywhere, all at once. Always an agent who will support any delusion by any seller who wants.

Just today I challenged an agent whose listing a buyer of mine has shown interest in because they listed the unit at 930SF. I noted that prior listings in the same line were 750SF, and even the unit in question was previously listed as 850SF.

The initial response was:
"We had our floor plan person come and measure. They told me 1000 gross, 930 usable "

Fortunately later I got:
"Floor plan guys of course made a mistake. Close to 750 "

But to me that 930SF even made it onto the listing when it's so obviously wrong is telling.

And BTW the seller initially put it on the market FSBO at $889k and it's now at $699k.

Maybe: apart from financial considerations, RE transactions are emotionally fraught - they're people's homes where they spent a lot of time, had great experiences, they're nest eggs, and they're signifiers ('this place is who I am') - whereas other assets are just assets. Plus, as everyone here's pointing out, people living in desirable areas of NY can afford to wait it out. Wouldn't be surprised if there were more price readjustments happening in more 'working class' neighborhoods.

@30yrs - that's an interesting point, haha. There's always an agent out there ready to indulge their clients' most delirious comps.

As others have posted, a lot depends on how bullish or bearish you are on NY. It has been through rough times before but this whole WFH thing is a big question mark hanging over the city. Maybe once there's more slack in the labor market that will change, who knows. Anyway, my dos centivos...

30, I have a story that I can tell you (and hopefully, everyone) in a month or six. Key words are "exposed brick"

>Recall many lively debates here on those topics 10-15 years ago.

Weirdly, I think I am slightly more bullish on Manhattan RE now, despite WFH overhang) considering the pay has moved 1.6x as you noted in another thread, and prices have not, so the ratio is probably a bit more reasonable. Not sure how I feel about the boroughs, as prices there have appreciated at least in line with earnings, or faster. Realize that between the migrant crisis, aging infrastructure and WFH, fiscal situation for the city is pretty dire.

>There’s no sense getting frustrated by it. If you think the market’s got it backwards, reassess and act accordingly.

Not frustrated by the sellers. Just curious about the observed differences.

People I am very frustrated by are RE agents (there has got to be some limits to lying about square footage, or whether something is to code, or a legal bedroom, or posting "virtual renovation" photos online).

Also frustrated by doctors. I tried booking an appointment for a specialist to address pregnancy back pain... first available appt at Langone (where I can book online) is past delivery date. Contacted a few more places a week ago, no one even bothered to call me back. When a relative had a kidney stone few years ago, Langone offered an appointment in 4 weeks. Outside of NYC, the relative got an appointment the next business day (because this was an emergency!). NYC doctors just don't care.

On NYC doctors. Long time to see any kind of doctor is really demand and supply issue for doctors in NYC. There just aren't enough doctors in NYC for the pent up demand for medical care during covid. In addition, many doctors are doing remote care and living outside of the city.

In your case, you may have to make an appointment outside the city with insurance or pay cash yourself for faster appointment. It is clearly not optimal but at least you get the care you need.

I think with doctors, it is mainly a supply issue. Supply is restricted. Furthermore, restricted supply results in very high wages, and people in this profession, especially women, are generally very prone to income effect. So once they hit their target income, many tend to scale back the hours.

Other things annoy me about healthcare as well, including poor administrative and billing practices. Once I showed up for a procedure only to find out that Dr. had to take a half day off, but his assistant forgot to tell me. The front desk even took my payment, as the appointment was in the system. I was sitting and waiting for the canceled appointment for 30 minutes before I discovered the Dr was not in the building. I took time off from work to be there that day, and did not even get an apology!
My nail salon treats me much better.

While I understand why many NYC sellers won’t sell unless they get “their” price, regardless of market conditions or comps, I don’t understand keeping the unit listed for 6, 12, 18 months etc…no buyer in their right mind will make a full price offer on a unit that has been stagnant for 6 plus months, more likely you’ll get lowball offers that just waste everyone’s time. Why not take the unit off the market and relist in the future so that the listing looks “fresh”.

My favorite watchlist property in the "classic" category has been actively on the market for over 1200 days, and has had 2 cuts: 22% (April 2021) and 17% (April 2023). Somebody (the broker? the board?) is clearly waiting for a buyer not in their right mind. (I think that unit/building is a special case, and that a buyer will not have cap rates on the unit foremost in their mind.)

>Why not take the unit off the market and relist in the future so that the listing looks “fresh”.

First thing I do with a listing is scroll down to see past listing history (as well as purchase price)... so it is not a great solution..

>I think that unit/building is a special case

Special in what sense? Is it a beautiful designer renovation or a landmark building?

Krolik,
Have you looked into MDVIP?

I have not. Looks interesting, I guess it is similar to One Medical. It is focused on primary care, but unfortunately the scheduling issues are usually with specialists. Also, almost every office within a large radius of my house is a part of Langone. When I lived by Columbus circle, it was Mount Sinai. I despise administrative practices at both (though MS is slightly worse).

I have found that having a long established, known PCP opens doors to specialists. It also doesn't suck having a PCP who I can call at 9PM and speak to, or will see me in person within 24 hours whenever I want.

One more thing NYC needs to spend a fortune addressing:

https://www.nytimes.com/2023/06/23/nyregion/brooklyn-queens-expressway-repair.html

Having Ginia Bellafante write an article about how to properly handle traffic/the physics of road construction/etc says a lot about what's wrong with The New York Times lately.

BQE is going to be a disaster

You get BK Heights NIMBYs / degrowther eco nuts / SJW / transit bike mafia / govt incompetence ... all leaning in the same direction - do nothing until it falls, and then be SHOCKED.

A lot of Amazon prime buying / Uber black riding North BK residents are like "well I don't have a car so why can't we get rid of the highway".

In all fairness, are those North BK residents Ubering south?

The whole BQE situation does make me wonder about Brooklyn Heights purchasing decisions. Basically, it’s gotta end up a horrible place to live (relative to now) for a good decade starting in ~10 years or so, right? Sorta like the area around 2nd Ave, except worse because being able to stroll on 2nd Ave was never a highlight of the neighborhood.

Re: North BK.. Sure, sometimes.
But where do they think all the goods & services they use come from? Everyone thinks it's magic.
And the "tear down BQE" gang is not just talking about that small cantilever section.

People aren't thinking of second order effects like.. all those trucks now driving on local roads.

BK Heights is an interesting case.
They seem to think they are sitting on a lottery ticket if the highway goes away / the park gets nicer / etc.

They seem to think they can advocate for some dream scenario where -
* BQE continues North AND South of them, but not thru (so they can still get everywhere when they need to!)
* Quick tear down of the cantilever
* Somehow all the thru traffic now going local doesn't effect them

Nonetheless it would seem to me that having a catastrophe on your doorstep is probably worse than living next to some construction for a while.. if you already, you know, live next to a highway.

I think the main problem is you have huge uncertainty on all dimensions - what is the repair/replace/demolish plan, when does it start, how long will it go?

It's like getting in a car for a road trip, but you don't know when the car is departing, where it is going, or how long it takes to get there.

Looking casually at some articles, I think the mess starts even sooner than ~10 years from now. What is your guess?

FWIW, I kinda look at the fantasy scenario advocacy and shrug.

I'm not sure I believe it starts significantly before 10 years from now.

They need a plan, then a design, then bids, then choose the vendor, then agree to a timeline.. all the while fighting various political battles.

I really could see it fall down first.

Right now its just.. an idea.

I think “falling down” counts as a mess starting.

Once the structural integrity is breached, the choices are to either let it crumble & fall down, or else to shut it (and the promenade) down while traffic diverts in either an orderly or disorderly fashion onto surface streets.

The way it’s been billed, that all seems closer than a 2033 thing. Reality don’t wait for an orderly plan to form.

@krolik: 820 5th Ave, #3.

Perversely, probably the best chance of a sane quick outcome is if it is destroyed in a storm or fire, no loss of life because people have evacuated, and emergency rebuilt, like that I-95 bit in Philly.

Everything else is going to be years of hell via hearings, courts, and city/state bureaucracy.

I'd have less of a bone to pick with these activist types if they put a fraction of the "tear it down / block / stop" energy into expanding transit / streamlining infrastructure construction / etc.

I'd LOVE to get around Brooklyn by subway if we had a functioning North-South line aside the joke of a G train. A normal city able to build would have built new lines to serve the newly high population areas that have developed in Brooklyn over the last 20 years.

If someone can figure out how to convert bike lanes into some kind of micro trolley.

Lincoln Restler is a huge impediment to any reasonable solution.

I worked for Port Authority of New York and New Jersey, Division of Operations Standards over 40 years ago. It was "known"
by "the infrastructure guys" back then that the BQE was going to need replacing "by the end of the century." It was part of the discussion in the proposed project to revamp all the roadways inside Kennedy Airport.

My recollection is that around 2000 there were engineering opinions that the BQE would structurally fail between 10 and 20 years out.

I think it is likely to collapse before a solution is found and implemented. Hope my loved ones will not be on it at that time.

Krolik I completely agree

My money is on a near future hurricane taking out a section