2011 and Early 2012 is Characterized by Great Disparity
NYC real estate market is highly stratified and continues to perform with great disparity depending on the segment. The difference between the condo and coop segments of the market has been more prominent than ever. Fundamentals for condos versus coops should be viewed separately.
Condo availability has decreased by about 10% compare to a year ago.
Condo pricing showed market broad average increase of 4% over a year ago.
Overabundance of units within the new development sector has been largely absorbed. Inventory is now highly limited and showing a 5% increase in price per square foot.
Manhattan real estate continues to be viewed as an attractive and safe investment vehicle, considering the uncertainties of economies and volatility of the stock markets. Limited inventory and a healthy foreign demand, with buyers coming in mainly from China, Russia, India, and South America, are major factors contributing to the surge in pricing.
Coop inventory has remained fairly even, and coop pricing has remained flat over a year ago.
The co-op market seems to be subject to a whole other set of influences. Without the contribution of foreign capital, buyers approach much more carefully. Coops are purchased primarily by domestic buyers as a primary residence and sales are heavily influenced by the uncertainties of US economy.
Inventory is abundant, especially in postwar buildings on the East Side from 14th Street up to 96th Street and sales continue to be slow with condition and price being crucial to timely selling.
The exception would be large high end properties costing over $4 million. Due to lack of inventory and a healthy demand, well priced apartment in a superb condition often attracts multiple bids with a quick sale to follow.
Spring is typically the busiest time for NYC real estate. As there is a strong pent-up demand from buyers who have had very little good inventory to choose from, we are expecting a very healthy and active market for several months to come.
Market Snapshot July 2011
The NYC real estate market is currently performing with a great disparity depending on the segment. Recent statistics provided by UrbanDigs.com, Manhattan real time real estate analytics company, are helpful in understanding the volume of signed contracts and the disparities between the submarkets defined by price.
1.All numbers confirm a significant increase in activity ( from first quarter to second quarter).
2. Market is performing much better within higher price ranges with percentages of signed contracts rising with higher price range.
Signed Contracts $1M marketó +8.9%
Signed Contracts $1M-$2M marketó +15.1%
Signed Contracts $2M-$5M marketó +27.8%
Signed Contracts $5M+ marketó +50%
There is a substantial difference between the performance of coops versus the condo submarkets.
Condos are selling a lot better than co-ops. In spite of the crises in Europe and some foreign investors holding back, there is still a continued demand for NYC condominiums - as a safe investment vehicle for foreign buyers from all over the world. As long as they are priced correctly, condos in all sizes and in all locations, especially below 96th Street, are selling well and quickly to out of town or out of country purchasers. Due mainly to the larger buyer pool, condos are not only selling faster, but right now more so than ever, for a higher price per square foot than coops.
The co-op market, which is typically in demand by mainly domestic and local purchasers, has been been subject to pause as careful and hesitant buyers are not looking to purchase promptly. Targeted towards a completely different type of a buyer, the coop segment of the market has been largely affected by apprehensions and anxieties caused by the the slowing national economic recovery and high unemployment levels.
Market is tough and particularly slow for smaller co-op units under $1M, including studios, and one and two bedroom units. There is a reduced level of activity within this segment mainly in midtown, Murray Hill, Kips Bay, and parts of Upper East Side.
Larger co-op apartments in prime locations will receive more traffic, as long as they are are correctly priced. There is a lack of inventory within large coop units ( 6 rooms and up ) and large loft units ( 2000 square feet ) so demand is stronger within these segments.
The market is doing especially well in the the price range above $2M and extremely well in the ultra luxury segments (over $5M) This segment of the market is performing well in West Village and mainly in Tribeca.
PRICE AND CONDITION
Now more than ever, the two major factors : Price and Condition (for both condos and coops) determine how quickly the apartment will sell. Competitively priced units that have something unique or are in flawless condition can still receive multiple bids and can even sell over asking price. Mint condition has become key even in older properties, as most buyers have progressively become a lot less interested in renovating.
If a unit is not getting any bids it needs a price reduction. Around 5% is usually the adjustment, the price calls for, in order for it to be noticed and to attract renewed interest.
Urgency on part of buyers is a thing of a past. Everyone moves at a leisurely pace when it comes to all aspects of the purchase process. Seeing a new listing, making a decision to move forward, pace of negotiations and signing a contract all happen slowly and cautiously, unless the unit is exceptionally rare and unique , super well priced and in a fabulous condition.
Market Snapshot May 2011
There is finally a feeling of "normalcy", with the market being healthy and active. Lack of quality inventory keeps the prices high. Limited supply along with historically low interest rates keep the demand high. There is an increased consumer confidence in the market resiliency. We are seeing great discrepancies within the market, with some properties getting multiple bids and flying of the market and others languishing for a long time. Apartments that are selling with ease are those that are unique, in prime locations or well priced compare to their competition. Correct pricing remains the crucial factor for generating real and serious bids. There have been over 1000 contracts signed per month since March alone. This is a healthy absorbtion considering the inventory of some 8000+ active listings.
We do see new developments finally coming back on the market again, which we have not witnessed for a few years. There are numerous unreleased new projects in the pipe line. This is reflective of the developer confidence in the near future of Manhattan real estate.
Did We Hit The Bottom ?
As always, there is a mix of of positive and negative press about the future of NYC real estate with mostly negative news about the future of residential real estate nationally. However, analyzing the actual numbers demonstrates, that when it comes to real estate, Manhattan just stands apart from the rest of the country.According to the experts, we have hit the bottom in the early 2009, when there were very few transactions being closed and those numbers reflected the greatest discounts from the peak levels.
Since then, it has been a slow and steady recovery with prices gradually improving since the post Lehman crash. The progressive improvement started with the lower end of the market and was followed by the higher end. Overall , the first half of both 2010 and 2011, have remained strong with demand being a bit higher in 2010. Currently, general demand remains strong, with the number of new listings coming on the market within the last 6 months being less than the year before. Right now the high end ( above $5M ) is the best performing market segment. In terms of the best performing neighborhoods, Gramercy, Flatiron, Upper West Side and Tribeca have the most signed contracts so far in 2011.
Broader Market versus the Submarkets
Although today most market segments are performing well, it is crucial to consider not just the overall broad market, but to diligently inspect the specific submarket of interest and how it is performing. Now, more than ever , both sellers and buyers need to understand the state of their particular submarket, it's pace and it's pricing. One bedroom condos around $800,000 downtown may be an extremely fast moving and a competitive product, while 2 bedroom coops on Upper East Side within the same price range is more of a sluggish scenario. Taking the submarket approach even a step further, it is the level of activity within a particular building with it's comparable sales that need to be targeted as the ultimate submarket.
Manhattan Real Estate Market Snapshot April 2011
Market Reports By All Major Brokerages Have Arrived And The Media Frenzy Has Begun.
As always, the media is commenting on Manhattan's First Quarter performance and coming up with headlines that may not necessarily be aligned with the reality of what is going on. There are several factors that contribute to the skewing of the actual numbers and their interpretation.
First: It is important to know, that for the most part, the reports are based on the prices of strictly sold units and do not include signed contracts.
Second: The reports do not necessarily reflect what is going on in the market right now, since we have a lag / gap between the actual sales and today's market.
Third: The four reports vary greatly in all their reporting numbers.
Consider just the numbers of homes sold in 1st quarter, for example, which are the numbers that the rest of the statistics are based on:
These are huge discrepancies in the sales volume data.
Which sales were included and which were omitted in which report ?
If you choose to look at public records of closed sales in ACRIS, the city database, you will encounter the same issue and discrepancy, since closed sales get filed with a 1 to 2 month's delay. Sales data are still being filed now, not just for March, but even for February and perhaps even for January.
In addition, all the statistics must be interpreted within the context of what is going on with the inventory
According to Bloomberg News: "Manhattan apartment prices dropped in the first quarter as condominium sales plummeted and new development deals made up the smallest share of the market in almost seven years"
According to the appraisal Miller Samuel, producer of the Elliman Report: "The shift in apartment demand sent condo transactions down 24 percent in the first quarter from a year earlier and sales of co-ops climbed 29 percent."
According to Noah Rosenblatt, founder of UrbanDigs.com, a real estate analytics and consulting company in New York: "There's just not as much condo supply as there was a year ago," Rosenblatt said. "If condo supply is down, of course you're going to see fewer condo sales."
According to all of the above: Prices are largely subject to what is currently selling, which is a product of what is currently available. Since condos (especially new development condos) are a lot pricier than coops and coop sales made up a much larger percentage of the First Quarter Sales today over a year ago, it brings us to a whole new understanding (or at least questioning) of "Manhattan Prices Decline Year over Year" headlines.
As a broker who is "out there in the trenches" actively working with clients, I always encounter the feeling of discrepancy between what is conveyed by the reports and portrayed by the media, versus what we actually experience.
In conclusion, I do not believe that what these reports and the media present, is an accurate representation of the ever changing, dynamic and complex Manhattan real estate market.
Manhattan is not just one market but it consists of many sub-markets, each of which has its own demand and pricing with its own individual numbers and reports. Recently signed contracts and sales within a specified and clearly defined sub-market will be a much better indication of the property value than any sort of broader market pricing.
Manhattan Real Estate Market Snapshot August and September 2010
Is It The Economy Or Was It The Record High Heat and Humidity ?
Seasonally slow market in the summer is not unusual for NYC, as the market is cyclical and always a subject to slowdown in the months of June, July and August. This summer was what we can call seasonally extreme. The slowdown seemed even sharper considering the frantically busy March and April, at the end of which came the expiration of the Buyer Tax Credit on April 30th, and correction in equity markets, both contributing to the abrupt decline in activity across all metrics. We saw steep downturn in pending sales pace, in pace of listings being taken off market, in pace of listings coming on market and in inventory declining as new supply was not coming to the market. Given the extreme of the slowdown, the prediction was that activity can only go up from these levels and after Labour Day, which traditionally ends the summer doldrums. As expected, the past few weeks have brought an increase in activity across the border and we are seeing the best measure of the current demand, which is an increase in pace of listings going from 'Active' to 'In Contract'. This is a typical market shift in activity for this time of the year and the pace should continue into October and November.
Apart from seasonality, the NYC market appears to be in a lot better shape than most of the country. NYC did not have as many exotic subprime mortgages as were issued elsewhere, so the number of delinquencies is a lot lower. We have had a recent improvement in employment situation, especially in the financial services industry, which is a significant contributor the regional rebound. Residential prices in New York have stabilized since the worst of the downturn, but most expert sources say that any substantial price increases are very unlikely anytime soon. Since the overall economic and employment outlook is still weak, prices are expected to stay mostly flat for the next few years.
Manhattan Real Estate Market Snapshot July 2010
We are going through a seasonal market slowdown after we have had a very active period at the end of 2009 and beginning of 2010. Traditionally, NYC market is subject to seasonality and the summer months are usually not very active. The volatile equity markets, declining euro and declined confidence effect are contributing factors to the recent slowing in sales pace. According to all the major real estate reports majority of closed transactions last year and 1st quarter of this year were coming from the sub-million dollar segment. This was most likely due to the majority of buyers in the market being value buyers looking to buy at a substantial price reduction off the asking price, as well as first time home buyers looking to finally become owners before the tax incentive deadline and during the market downturn. However, recently the higher end of the market has finally started to experience surge in activity. According to recent post on Bloomberg News for example, Manhattanís super-luxury apartments, those sold for $10 million or more, outperformed the rest of the cityís housing market in the first quarter.
Manhattan Real Estate Market Snapshot June 2010
After we have had a very busy period all of a sudden lot less seems to be happening!
The NYC real estate market is always extremely dynamic and more so now than ever. Itís not really possible to get an understanding of the market by reading what the media has to say and/or analyzing the quarterly reports which always and inevitably lag behind the current real time market conditions. As discussed in detail in a great post by Noah Rosenblatt on http://www.urbandigs.com/2010/02/understanding_the_lag_w_quarte.htmlthere are numerous factors that contribute to this lag it takes for a listing to be included in major the quarterly reports which are released to the consumer and interpreted as today's market conditions. Amongst the reasons are Broker Status Updates, Purchase Application Process, Loan Commitment, Management Approval, Board Approval, Closing and finally the Public Record Entry. All of these steps can collectively take anywhere from several weeks to several months.
Focusing on signed contracts as opose to sold sales data, as well as making and receiving offers and getting a sense of what is going on from the feedback is a better way of trying to gage where the market stands today. Ultimately the best way to try to evaluate and understand the market is to be actively engaged in it. This means seeing as many properties as possible, talking to buyers, sellers, other brokers, sales managers, attorneys, managing agents....
Coming from my own experiences, speaking with other agents and extracting information from numerous real estate blogs and posts, here are some picks on what seems to be happening in the market right now.
Correct pricing is absolutely crucial
Apartments that sell well and faster than others have something special or different about them, such as outstanding views, exclusive renovations, garden or excellent outdoor space, unique loft-like spaces, amenities....
It is not easy to get buyers for fixer-uppers or anything that needs a work. Unrenovated units take much longer to sell.
One bedrooms and studios are still a strong segment of the market while the $1M to $2M market which has a lot less inventory seems to be doing the best right now.
The high-end market has made a definite comeback.
The townhouse segment of the market which has been near standstill for a while is still slow, though showing slight improvement in activity
The downtown market between Canal Street and 23rd Street is active and doing well.
Williamsburg is really active now that prices have come down substantially.
Rental market has recently improved. Concessions are down to the point where most landlords are no longer giving free rent and/or paying broker fees.
Manhattan Real Estate Market Snapshot May 2010
Here is a quick summary of what we are seeing one third into the second quarter of 2010.
Real Estate market has picked up and and is finally showing healthy activity. Sales volume is up and currently estimated to be over 100% higher than a year ago. Many buyers are now acting quickly and going into contract on properties that are correctly priced. There is a renewed confidence in the market and in the future of the economy. The outstanding inventory of apartments is being rapidly absorbed. Prices have stabilized and many neighborhoods are now recovering off their lows. We do see deals going into contract at asking or above asking prices and we are even seeing some bidding wars.
At the same time we are still working within a very confusing environment, where prices are all over the place and things seem to change almost daily. Although the number of serious buyers has increased, we are still in very challenging financing environment and in a whole new world of appraisals.
Prices staying flat for a while is the most common interpretation.
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