Are prices really going down?

Those people are delusional, that's what's happening.

Now the broker tactic of scaring people into thinking they're "missing the boat" is being played. If someone were ready to buy, but waiting for cheaper prices, and started seeing prices on a place or two they were interested in going up, he/she might be tricked into thinking things are "getting better."

Too bad that the reality is quite the opposite.

Those properties raising prices will likely stay on the market indefinitely

you are right that while there have been some spectacular price reductions in the high priced market, and indeed a countable number of properties have brought down their prices, the general decline of 25-50% that everyone brandishes here as evident, is not quite evident.
The anticipation has been there for about 2 years on this board, and every drop is greeted with enthusiasm (as it should). However, if you are are looking for a dream home AND want it at the 50% off, the wait continues.
Perhaps on a midsummer night..................

I think some folk increase prices temporarily just so they can highlight the "fact" that they then have cut prices.

Kinda weird. But I guess sometimes silly things like this could influence some unsophisticated buyers.

Joedavis is right...As I have been saying on here a few times, for all the many bloggers on this site who repeatedly say that prices are dropping by huge percents,Ｉｓｅｅ　ｂｕｉｌｄｉｎｇ　ａｆｔｅｒ　ｂｕｉｌｄｉｎｇ　ｗｈｅｒｅ　ｔｈａｔ　ｉｓ　ｎｏｔ　ｔｒｕｅ．　Ｉ　ｈｏｐｅ　ｉｔ　ｈａｐｐｅｎｓ．　Ｆｒｏｍ　ｍｙ　ｐｏｉｎｔ　ｏｆ　ｖｉｅｗ，　ｔｈｅ　ａｕｃｔｉｏｎ　ｓｔｏｒｙ　ａｂｏｕｔ　ｃｏｎｄｏｓ　ｂｅｉｎｉｇ　ａｕｃｔｉｏｎｅｄ　ａｔ　ｈｕｇｅ　ｄｉｓｃｏｕｎｔｓ　ｉｓ　ｗｈａｔ　ｃｏｕｌｄ　ｆｉｎａｌｌｙ　ｃａｕｓｅ　ｓｏｍｅ　ａｃｒｏｓｓ　ｔｈｅ　ｂｏａｒｄ　ｃｕｔｓ，　ｉ．ｅ．　ｐｕｎｃｔｕｒｅ　ｔｈｅ　ｄｅｌｕｓｉｏｎｓ　ｏｆ　ｓｅｌｌｅｒｓ　ａｓｋｉｎｇ　ｈｉｇｈ　ｐｒｉｃｅｓ．

Are brokers really going down?

I'm looking at 2+/2s in the under $1.75 range, all downtown, UES, Morningside, and Harlem (quite the geographic area) and prices are diving. I'm looking just for fun as I don't think I'll buy before 2011, probably 2012, but I'm seeing things that were priced at $2.3 down to $1.6, quite a bit that was at $1.2-1.3 now at around $1. I'm finally seeing some decent places at under $900 psf.

I should add that I'm not looking in new developments that started closings after 2006. Those may be a whole different game.

send links on 2.3 down to 1.6. thanks.

See 42 E. 20th, 5C. I don't really keep a list, like I said I do this just for fun, but I have recently been amazed.

On paper, brokers and seller are not lowering prices. . .much. But soon they will have absolutely no choice. Should be close to 40% lower by the end of the third quarter.

Here's another nice cut, $2ish to 1.6ish, 148 Chambers. They are all over the place. We even have threads devoted to them.

42 e 20, 5c appears to a prime example of everything that is wrong. listed at 1,600 sq ft, I would guess that it is less than 1,000. also was taken off the market at 1.995 so i'm not seeing the drop to 1.6.

prices are diving and honestly, if you don't see it then you aren't paying attention. it has become relatively standard for things to be listed with an initial asking price as much as 20% below comps. actual sales that are happening are often much further off than that.

noah at urbandigs has a great post about price increases. basically, he says to ignore them. anyone can ask any price for an apartment, but think about it: if you list your apartment at $1 million and it does not sell, and then you raise your asking price to $1.2 million and it doesn't sell, has the market gone up? obviously not. the apartment couldn't sell for $1 million and it can't sell for $1.2 million.

you all are you impatient and seem to expect the perfect apartment to fall into your lap at an amazing price. if that's your expectation then expect to be disappointed. but the market has unquestionably reset to 2004/2005 prices and many units are falling well below that. if that's not a bear market i don't know what is.

Columbiacounty, it was originally listed by Elliman at $2.4. I'm not arguing as to whether the price of this given unit is correct, I'm saying that prices are dropping. Happyrenter is correct. I have followed the market for years (as a selller/buyer in the 2000 market, a seller/potential buyer in the 2003-04 market, and as a saddened potential buyer from 2004 on. I look at listings weekly. Prices are not where I'd want to buy, and I may never buy for that matter, but they are going down.

columbiacounty, that apartment may not be 1600 sf (although I'm pretty sure the floor plan produced would have the architect's square footage so I'm not sure that there'd be room for lying), but you are insane if you think it's less than 1000. I'd say 1450, using old standards, more by the new ones the developers seemed to come up with. And I sold a similar loft that was 1300sf.

you're right -- i spoke too quickly.

but...reasonable estimate for outside measurements is 43 by 29 or 1,247 which is a shocking 22% less than advertised. so, the first 22% drop is just to get it to where it should have been in the first place.

yes, prices are dropping. yes, the economy is in a tailspin. but the wholesale substitution of so called amenities for space, light, views and reasonable construction standards was a recipe for trouble in the first place. people who fell for putting in 10K worth of appliances and fixtures to overlook a missing 22% in square footage .... well, what can you say?

Here's the issue:

Sales in Manhattan
We found 10,647 listings
Median price: $1,150,000 Median size: 1,119 ft² Median price per ft²: $1,098

Median price is obviously still too high, but it's really only part of the story as a market begins it's descent. I would remain in PCV forever rather than buy the following unit, but take a look at 1725 York, Apartment 29E, Then look at the listing history for the building. And this is a conforming loan situation for a convertible three. Is it still overpriced at under $900K? Who knows, but if one found it convenient (it would be very convenient for us) it isn't tremendously expensive.

Here's a little help for those of you who still want to think prices aren't going down. The source is truegotham.com, RE broker Doug Hedding's blog:

Written By:Douglas Heddings On February 27, 2009 9:04 AM

"...I would like to tell you what I'm seeing as it relates to these points:

1. Defintely we have a Dutch auction atmosphere in some instances but I'm telling you first hand that many sellers are listening and pricing already at levels 25-30% below what their place would have sold last summer...and buyers are buying these places as they perceive value."

2. Asset deflation: sure many will wait and see how much further the market drops but again, many are pleased enough with already greatly reduced prices paired with a long time line of ownership (7-10 years) so they feel comfortable buying their "nest."

The basic point here is that there is no neat categorization of market factors today. Different strokes for different folks. Some are buying and some are not. Some are pricing appropriately and selling and others are not."

and Doug Heddings tends to be bullish.

This should be a civil discussion. I don't think those on here quesstioning how far prices have fallen are questioning that the market is off, or that prices may well come down much more, but the point is that prices do not seem, in case of plenty of buildings, to be slashed by any major amount (so, assuming a seller will take say 15% less than asking, it still doesn't add up to huge prices slashes.

Happyrenter says: "but the market has unquestionably reset to 2004/2005 prices and many units are falling well below that." But if that is so can you explain the building at 270 W 17th Street , a run-of -the -mill medium speed condo where prices do not appear to have reset to 4 years ago. I mention this building bec to me it is ludicrously overpriced and I used to live there. I'm not trying to be combative, I just think many, many sellers are not yet ready to sell at prices of several years ago...but I think and hope they will at some point.

agree completely.

it is not in anyone's best interest (even potential buyers) to rush to the conclusion that the sky is falling. what everyone needs is an orderly informed market absent the previous inflated hype and absent the new deflated hype.

as always the media wants to take a thread of bad news and generalize it across the board.

as an example, note the thread titled "are mortgages over?" perhaps more helpful would be "how have mortgages changed and what do we think will be the ongoing pattern of change?" realize that's boring compared to "mortgages done! run for the hills!" but come on.

jim,

when i say the market has reset to 2004 prices let me be clear about what i mean and what i do not mean. i do not mean that asking prices have reset to 2004. asking prices are not the market. so sure, some buildings and some units are asking insane prices and not selling. they are essentially irrelevant.

i do not mean that no units are selling for prices higher than they would have in 2004. real estate is idiosyncratic and strange deals either far above or far below the market can happen under any market conditions.

what i do mean is that most contracts being signed right now (and there aren't that many) are being signed somewhere around 2004 prices--between 25% and 35% off the peak. this is what doug heddings is seeing, what noah is seeing; it's what is happening. if you just pay attention to asking prices you can get frustrated, but remember: sellers can ask whatever they want. it really isn't relevant to the market.

I just went through 169 open house listings for the UWS, 2+ bedrooms under $1.75M. Almost everything that has spent any time on the market at all has been reduced. One poor seller has reduced a three bedroom by around $400K and the unit hasn't even been on the market for two months. Numerous hits for units under $1M, some of them quite nice. Are we at 2003 prices yet? Not even close, with a couple of rare exceptions. That eyesore that I mentioned earlier for under $900K would have probably been $600K or so in 2003, but it would have been 1.1-1.3 last year. It doesn't happen overnight.

Jim, regarding that cookie cutter building in Chelsea, that's not that unusual downtown (not FiDi, but Flatiron/Chelsea/Village/Noho). Prices seem a bit stickier so far (sadly, it's my favorite area, but I'm very patient). But, alot of these units went to younger people in the financial world (I've seen quite a few two bedrooms where the second bedroom is inhabited by gym equipment or a huge tv), so I would think some price movement should be coming along shortly.

columbia,
it may be in my interest to have an informed and orderly market, but the fact is that right now the market is neither informed nor orderly. asking prices are all over the map, condos are going on the auction block and no one knows what they might sell for, the economy is in a tailspin. sure, i wish this weren't the case, but wishing it isn't going to make it so. i am calling at as i see it, not how i wish i saw it.

I totally agree with happyrenter... it's a buyers market so who cares what price the sellers are asking? they can raise their prices all they want, but it doesn't mean they will find buyers to buy at those prices.

I went to an open house today alcove studio first listed at $535k (crazy) now listed at $400k and the agent said they are accepting all offers...I am seeing alcove studios dropping in price, not all but some..i'm hoping they'll come down under $350k.

why would anyone consider buying an alcove studio at this price? unless the monthlies are nothing, i have to believe that you are world's better off renting. and, sorry, an alcove studio is a commodity...a way point on the road to something else.

because an alcove studio can be converted to a bedroom (small) and under $350k why would it be better to rent. My current rent is $2495.

Thanks happy renter for the clarification. What you say makes sense...what still surprises me is how wacko some sellers are; Either they do not need to sell and are listing as a kind of unserious hope that some idiot will buy, or they need to sell but are in denial and are holding out for a market turnaround. Those who need to sell will little by little get hit by reality as actual closing prices fall as happyrenter notes.

I have a question to happy renter or others. On some gut level I think a cookie cutter condo, even in good areas of Manhattan like Chelsea shouldn't exceed say 700 sf and out to be nearer t0 600sf,...and Wmburg (my other potential area) should be say 30% less than that, esp. due to supply factors. That is the level I am waiting for ...600-700, in Chelsea which is roughly what it was I think back in 2000, at least in the building I lived in as i recall. Does this benchmark seems sensible?

350 K means put down 70 -- maybe 105 now who knows. lets assume the 70--mortgage at 280 at 6% --- lets just talk interest to make it simple. $16,800... assume 35% all in tax bracket...net cost is 10,920 call it $1,000 per month. opportunity cost on your 70 K? 3% after tax or another 200. so $1,200 a month but...i think $2,495 for an alcove studio is this market is nuts. lets assume more reasonably $1750. so...for saving $550 a month, you get to cover the risk on $350 K in principal?

this was a simple idea a year ago...worst case we all thought was up 10% a year. but $550 is equal to $6,600. so breakeven would be a decrease in value of 1.8%!

and supposing i was a little generous in the tax deduction or god forbid you lose your income for six months.

come on...how does that make any sense?

Is it just me or did no one else get the memo that stated Citibank is nationalized this Friday? Hmmmm... jimmy... NYC RE (asset price) will go down but not as quickly as rents (that's for you Julia.... you're paying way too much... next go around your rent will be $1,800/month). That's a w67 guarantee....

$2495 is high for a small one bedroom elevator bldg but getting a one bedroom for $1795 I would rent if I could find that..My lease isn't up till the fall plus I get one month free rent so it'll be around Dec. 1 when I have to move. I just don't know how I can find a one bedroom (small) for $1795. thanks for your analysis.

Also, LLs won't sign anything more than one year so every year i have to either move or worry about how much the increase will be. I felt I would finally be able to stay for a while if I bought something.

note my comment and w67...the game has finally changed and it is all to your advantage. don't get stuck in a purchase now. supposing it goes down another 15%...that's 50K after tax money...pays for a lot of moving.

you've got time...just keep watching.

Julia, as I have often noted, I got my Peter Cooper large 2/2 for only $2700 five years ago. Do you really think the rental market won't adjust downward by December? Rental markets are much less sticky than purchase, many landlords have been held their property for ages, they can undercut the competition at will to get tenants if they need to (don't flame people, I know that some can't, and in some markets some won't, but now is not the time to warehouse). Will you get a Related apartment? No, of course not. But you'll get something quite decent. Patience, my pretty.

"Seems to me like most Manhattan listings are being offered at a premium over 2007 listing prices, and often 2008 prices. Though many listings show decreases, I've also seen quite a few instances of raising offering prices. What is really happening in the market? "

They can ask whatever they want, actual selling prices are down 20-25%.

Been waiting a long time to see some value in the desirable UWS offerings, as many have expressed in various threads over the recent weeks. I thought it was just me, but I am encouraged to read that many others refrained from buying (because prices just did not make any sense.)

And now, we have to factor in the global economic crisis, because the collapse may be worse than expected. It may be time to retire to Florida before we have the opportunity to buy.

I liked a few phrases from this column:

http://www.businessinsider.com/new-york-realtors-embrace-new-marketing-strategy-reduced-2009-3

Some condo developers are planning to auction their inventory in April. Why anyone would consider buying before that time is beyond me. We have an illiquid market and nobody knows where prices are going to settle. This auction ought to bring some clarity to real estate market. I expect things will be frozen until then.

YO! Columbiacounty, julia et. al. ....

Julia, bf the kids, I loved moving within NYC (college dorms, roommates... etc.) It's really cool to live in a new area in NYC and not be a commuter within it :). The biggest pain for me was the moving boxes of LP (yes vinyls), picture albums (travels around the world) and worrying about them... but now, I've got it all on a imac... grab your cell, transfer you cable account, grab your imac, get new ikea crap, and a temporary bf/gr with a strong back... and if you time it right, take 2 months off (with your rent savings) and travel the world... youth hostels and cheap lodging abounds in most parts of the world!

Enjoy this depression! Cause when you get back the rents will be $1K for a studio!

Columbia County:

3% return after tax is your comp rate for that amount of risk??

NYS/NYC Munis for 30 years: 5.5% after tax.

EQR or AVB cap rates (based on rental income): 9.5%*.65=6% (They use the cap rate to both pay you your dividend. They are levered, but the yield still comes to about 8 to 9%, and that is net of paying down their debt.)

So why on earth are we comparing to 3%?

Your comp is off, thus so is your cap rate.

Much cheaper to rent the same studio than to buy.

Happy Renter - very good posts on this thread.

I will resume further mockery of you tomorrow, but for the moment, very good posts...

Okay, I found a peach of a listing that to me captures the housing bubble in a nutshell:
http://www.streeteasy.com/nyc/sale/389219-coop-220-congress-street-cobble-hill-brooklyn

Sold twice in 2008, the second time for $50k more than the first, and now the person who bought it in November 2008 - well after the crisis went viral - has listed it for $50k more again. $100k appreciation in under a year on 1-bedroom apartment is absurd. Unless there is something peculiar about this listing that I am missing. My guess is that this will sell for under $450k.

evnyc,

It's interesting that's it's changed hands so quickly that often, but I'm not sure it's that nuts. Personally, I don't understand the draw of 220 Congress. It's an ok building but it has a certain retirement home complex feel to it. The location is fantastic, as it's prime Cobble Hill, but I prefer other blocks as well.

I'm not criticizing the area by any means, but the first $50k was a 12.5% increase, and if the second sellers got their price that would be a 25% appreciation on a single unit in the space of a year. It's a snapshot of an asset bubble.

The building is indeed ugly, but reasonably well maintained and the block is nice. The apartments in there are utilitarian, in the good sense, if unexciting. The price, however, is a remnant of a bygone age. They'll be lucky to get 400, and low to mid 3's is probably a more realistic target.

buddha--was trying to be ultra conservative....I agree renting is the only way to go in this case.