The Real Deal’s Lauren Elkies reports that, despite rising inventory and falling prices in many parts of the U.S. real estate market, anecdotally at least, the high-end in Manhattan has low inventory and high prices.
At the ultra-high end, most sales property has problems, brokers say. "They’re out there, but not on the absolute best streets, or they’re not particularly wide," Berman said. "For the crème-de-la-crème, it’s limited."
Brokers who sell exclusively in the ultra-luxury market — where properties command prices of $20 million or more — say their clients are discouraged.
"The frustration is what they want is not on the market," said Meredyth Hull Smith, a senior vice president at Sotheby’s International Realty. She is the agent for a mansion in the East 70s that reportedly was under contract for $45 million last month.
I am finding the same thing. I have a client at the moment at the $10 million price point and another shopping to spend about $20 million. Sparse is an understatement when describing inventory available for these clients.
The remarkable fact about the inventory that is available is that it rarely offers what a buyer expects to get in this price range. It is very hard for a buyer to swallow that they can’t have every single thing that they want when they are spending $20 million, but it is almost always the case.
Not unlike the lower end (those only paying $3-5 million… ha… did I just refer to that as "lower end"?) of the luxury market, and the overall market in general, the high-end buyer is being forced to prioritize. There also seem to be more buyers willing to take their time and see how the market develops before dropping tens of millions. I also believe that the lack of inventory can be attributed to prospective sellers either not needing to move or also waiting to see how the market shakes out. After all, people in this price point rarely are “forced” to do anything… including move.
Fun Manhattan real estate stuff from YouTube. For instance: There’s no denying that new condominiums and chain coffee shops are making their presence felt in Manhattan. Plenty of people wish it weren’t so, and some of them banded together to protest with… bubbles!
A celebrity map of New York City, with lively Pixies music. Oddly fascinating.
And showing apartments to the world with amateur video. The future of online property shopping will likely involve plenty of videos like this:
- Really good James Surowiecki article about median sales price: "There are plenty of statistics available about the housing market, but median home prices, which are tracked by both the National Association of Realtors and the Census Bureau, are what typically make headlines. They seem to tell buyers and sellers exactly what they want to know: how much the one has to spend, how much the other stands to make. The N.A.R. says that median sale prices for existing homes have risen fifty-seven per cent since 2000, and in many markets the increase has been much bigger than that. Although these numbers come from an association that has a vested interest in making the housing market look healthy, they do provide a roughly accurate picture of how housing prices have behaved in the past six years. But if you’re trying to figure out what kind of investment housing is—what rewards you can expect and what risks you’ll run—median prices become a lot less useful."
- Remember flipping?
- Not getting any easier to find a good rental, according to this.
- Zillow is coming to New York and you’re invited to a party.
- One reaction reportedly expressed at the Landmark Preservation Committee’s meeting on Sir Norman Foster’s upper east side skyscraper: "Vertical, glass, and circular. Masonry, rectangular, and horizontal. There is no relationship whatsoever."
I’m often asked by clients whether or not they should consider hiring an agent that is also resident of their building to represent them during the sale of their apartment. There is no cut and dry answer, obviously as it depends greatly on the individual agent. That said, many buildings have very solid agents living among the residents who often bring much more to the table than an outside agent possibly could.
The inspiration for this story came to me last Friday as I was accompanying a buyer on a tour of properties around Manhattan. When we arrived at the Lincoln Towers building at 180 West End Avenue, we were met by Cathy Blau of the Corcoran Group. A resident of 180, Cathy showed us the apartment with the passion of a content resident happy to call this building home for the past 26 years. She was informative like no outside agent could be and provided a window into what living at 180 would be like for my buyer. This experience with Cathy made me ask the question, “Why would anyone who owns at 180 West End Avenue hire anyone other than Cathy to sell their property?”
I don’t know the answer, as I can’t imagine that anyone has more in depth knowledge of the building, its amenities, staff, Board, and financial condition than her—not to mention that she was also very sincere. I have actually represented sellers of apartments at 180 West End Avenue and feel confident that I knew the building as well as anyone could. Except for someone like Cathy. If I were a resident of the building, I would absolutely consider Cathy Blau before anyone else.
On the flip side, I have had the fortune of selling more than 30 apartments at The Armory at 529 West 42nd Street. At the time I began representing sellers in the building, there were 3 or 4 resident agents that owners could choose from. When I came into the building, those agents scoffed at the prices I suggested owners could get for their apartments. I brought a new energy and perspective to the building and sold apartments for considerably more than any of the resident agents believed was attainable. While they were trapped “inside the box” and I was outside, looking at a very different building.
My suggestion to those who have an real estate agent living amongst them, interview them first, but interview them as you would any outside agent. If you doubt their ability, interview 2 outside agents for the sake of comparison. Remember, that having an agent with intimate knowledge of your building could be a huge asset when selling your apartment. Since someone who thinks from inside the box can be to your detriment, just be certain that they are the caliber of professional that will insure you get the best price for your property. If they are, you need not look any further—hire them!
New York magazine’s S.Jhoanna Robledo breaks down who it is buying all those new Manhattan condominiums. (Crude synopsis: it’s single people who work in accounting and finance.) It’s a changing market, that’s for sure. For instance:
New York is—unlike, say, Miami or Las Vegas—a city of local buyers. Investors make up a much smaller slice of the pie here, maybe 4 percent (compared with up to 40 percent in those other cities). The new condo buyer is also much less neighborhood-driven than New York buyers have traditionally been. The building, rather than its site, is king. “It’s no longer truly about location alone,” says Corcoran Sunshine Marketing Group president Kelly Mack. Buyers swap the Upper West Side for Tribeca, Chelsea for Murray Hill, the East Village for Prospect Heights. “It used to be our competitors were other buildings on the Upper East Side,” says Orin Wilf, the developer of 170 East End Avenue. “[Now they’re] all over.” Toby Klein of Two Trees Management, which has sold off units in three condos in Dumbo, says the now-coveted neighborhood didn’t see outsiders—investors and foreigners alike—six or seven years ago. “We were strictly a local story,” she says. These days, only a quarter of its contracts are from the area.
Some thoughts about this article:
- I’m very surprised that the piece points out how weak the dollar is for foreign investors, yet the percentage of foreign buyers in many of these condo projects is in the single digits. That is puzzling to me as the buzz throughout the industry is that foreign buyers are gobbling up Manhattan.
- As far as location not being as important, that is certainly possible but I believe that is more a result of the growing number of “hot” neighborhoods and less about buyers not caring about neighborhood. They are just more open to looking outside of their “favorite” ‘hood these days.
- I am also seeing a greater number of younger buyers and single women but this is not a new trend. This has been happening for the past eight years as the NYC market has been booming.
- I am also seeing retirees coming back to the city and families increasingly forgoing the suburbs, particularly as the style of new developments has made great strides to accommodate their lifestyles.
All in all, a very positive piece for the NY real estate market but I still think there is more foreign money coming into the city now than appears in this article.
Curbed has an incredible collection of news about the big sale.
What you learn from all that is that no one knows all that much about what’s going to happen. Here are some basics about the private new owner, Jerry Speyer:
- He’s developing Yankee Stadium.
- He put together the deals to buy lots of prominent properties around the world. In New York the list includes Rockefeller Center, the Chrysler Building the former Pan Am building.
- He’s vice chairman of the Museum of Modern Art.
William Neuman of The New York Times also reports:
His company, Tishman Speyer Properties, was the developer for the eye-catching addition to the Hearst Building on Eighth Avenue and 57th Street, which was designed by the architect Norman Foster. The company is also serving as the developer on the Yankee Stadium project, which is due to be completed in time for the 2009 baseball season. (Mr. Speyer has what he describes as a small ownership interest in the team.)
Tishman Speyer has also joined with Steve Swindal, a partner in the Yankees and the son-in-law of the team’s principal owner, George Steinbrenner, in making a bid to run the state’s thoroughbred racing franchise.
Mr. Speyer is also known as a prominent philanthropist with an interest in the arts. He helped spur the recent expansion of the Museum of Modern Art and he displays his own collection of artwork by such artists as Jeff Koons and Frank Stella at a large town house he built for himself in the East 70’s.
But, before yesterday, when he emerged at the head of the investment team in a $5.4 billion deal to buy Stuyvesant Town and Peter Cooper Village, Mr. Speyer’s residential portfolio in New York was empty.
The sale of the 110-building complex has brought criticism from tenant groups and been a source of anxiety for many residents. Mr. Speyer tried to allay tenant fears yesterday, saying he plans to run Stuyvesant Town and Peter Cooper Village with the same professionalism with which he has managed his commercial properties.
“Were going to take the tension out of this,” Mr. Speyer said. “Because we’re going to be great landlords for the families that live in this place.”
In another Times article, this one by Charles V. Bagli, it’s clear no one really knows what will come next:
An elated Mr. Speyer appeared well aware of the complexes’ place in the city’s culture and the political sensitivity of the sale.
“As a business with deep roots in New York City, we have a sincere appreciation for these cherished neighborhoods, and we are honored to become stewards of the property,” Mr. Speyer said. “We are committed to working closely with residents, elected officials and community leaders to ensure a dynamic and vibrant future for this New York community.”
His son, Rob Speyer, a senior managing director at Tishman Speyer, also tried to reassure tenants, emphasizing, “There will be no sudden or dramatic shifts in the community’s makeup, character or charm.” But he would not commit to preserving a large block of apartments as affordable housing, which the tenant group had sought.
The truth is no one knows all that much about what will happen. The only thing that I would add would be my expectation that Mr. Speyer will do the right thing with this massive parcel. I am heartened that a New York developer won the bidding, and I’m convinced that minimizes the chances of anything insane happening there.
Which makes me think…assuming there were no zoning laws at all, what type of property or what would you like to see on the site? Condos? Hotels? Perhaps a simple facelift only? Maybe Disney NYC?
Seriously though… I would love to know what people think should happen or not happen to this incredible urban parcel.
A Hamptons real estate blogger reports that top producing agents are making plenty of deals these days, while other agents and brokers are sitting on the sidelines. As far as I can tell, things are very similar in New York City. Top agents are increasingly overwhelmed with business while newer agents scratch and claw. Not a fun place to be new in the profession.
My colleagues who are top producers are continuously baffled by media reports of a slow market. I speculate that the savvy real estate professional has a firmer handle on pricing, marketing, and negotiating. If you haven’t been through it before, it can be hard to know how to read the tea leaves of a market like this. Meanwhile, the newer agents continue to volunteer to sit at open houses for the top agents in hopes of snatching up just one “real” buyer. My advice to new agents… put together an intriguing resume and get cracking on joining a top producer’s team.
Urban Digs is talking about what a lot of buyers are thinking about these days: low ball offers. Here’s an excerpt:
For buyers, the BEST situation to submit a low-ball offer is when:
1. Seller has reduced the price for 3rd time
2. Seller reduced price two times within 4 weeks
3. Property has been on the market for at least 4 months
4. You show up to OH and apartment is empty with no names on sign in sheet
5. You find out that seller bought 5+ years ago
6. Imperfections are cosmetic NOT permanent
The WORST time to submit a low-ball offer is when:
1. Seller has not reduced asking price yet
2. Apartment is less than 4 weeks on market
3. OH and/or showings are crowded
There’s a lot more. It’s worth reading the whole post.
Here’s my main thought: the most successful sales tend to be those where both buyer and seller feel they are getting a good deal. An aggressive low-ball offer will work in some cases, but in many others it will make the seller–who is no doubt wise to the tactic, feel vicitimized. At the moment of the offer, it almost always enrages a seller. Urban Digs has put together a useful piece here but there are some holes. As someone who has for 15 years represented both buyers submitting “low ball” offers and sellers receiving “low ball” offers I would add the following comments, particularly for our current market:
- A “one time” low ball offer, as recommened by Urban Digs, is almost never taken seriously by a seller in my experience. It gives the appearance that the buyer is in the marketplace “fishing” for a steal and no seller wants to feel like they have been taken advantage of. I would recommend making a lower initial offer and leaving room for negotiation so that the seller has the sense (perhaps falsely) that they aren’t being screwed.
- When the seller purchased the apartment is not as relevant as their current situation and current market conditions. How much money they are making on the sale need not be a concern for buyers, and sellers often resent the buyer who presents an offer based on “what the seller paid X number of years ago.” Why and when they are moving is much more relevant.
- Basing a low ball offer on recent price drops is not wise in my opinion. Often a seller is more reluctant to negotiate further when they have already reduced their price multiple times. Again, I’m not suggesting that they shouldn’t negotiate further, but my experience is that sellers often respond by saying that they just reduced their price and want to see how it is received by the market (they feel like it’s new to the market at this new price).
- Open house traffic is not always a good measure of interest. I have taken buyers to open houses in which 50 people attended and no offers were submitted (by the way, often very difficult to get the honest feedback from the seller’s broker regarding “interest.”) I have also seen open houses where the one person who attended paid the asking price. Last winter, I had two open houses in the same building on a Sunday of mixed sleet and freezing rain. The same two people attended both. Each bought one of the apartments. Certainly not the norm, but it happens.
These are just some of the problems I have seen when buyers submit “low ball” offers but I am not suggesting for one minute that they aren’t sometimes accepted. I just think you have to have as full and as clear of a picture of the seller’s situation as possible as Urban Digs states. That said, many properties are more aggressively priced in today’s market and I am seeing a increase in sales volume the past several weeks. It appears however that the newer agents in the biz are struggling while the top agents are incredibly busy negotiating “fair market values.” I still don’t think we’re in a market where buyers should expect to get an incredible bargain.
Doug has been working like a maniac the last few days, hopefully soon he’ll have a little time to tell us about it. In the meantime, he did just call with a report of what it’s like to spend quality time on the streets of Manhattan in the new TrueGotham Mini Cooper.
.jpg)
"It’s a home run with the ten year olds," he says via cell phone. "I’m parked on the street right now and in the last minute alone two different boys stopped and said ‘THAT’S COOL!’ It’s like that everywhere I go. I hope those kids all have computers at home and read my blog–’cause that’s definitely a crowd that’s really noticing."
Toni Schlesinger’s book Five Flights Up has a lot of good Manhattan real estate stories. Freelance photographer Keith Rizza talks about Hell’s Kitchen in a 1999 interview:
Actually, five years ago I saw an apartment in this same building through my friend’s sister. At the time I said, "No way on God’s green earth am I going to live in Hell’s Kitchen." The neighborhood was boring and depressing and had no character. When I first came to New York I thought it would be really nice to live in the West Village, SoHo. They were all out of my price range. I’d come to go to school at Pratt. Then I moved in with my first boyfriend, who had a beautiful apartment in Chelsea. But then I broke up with him. I had to start doing roommate situations. I lived with insane people constantly. At one point I was sleeping where the front door was literally two feet from my bed. My roommates would come home at three in the morning with friends. Years passed. I heard about another apartment in this building and I didn’t have to think twice. I’d learned that living in New York is about getting a good space at a good price. Meanwhile, the neigborhood has been changing. A lot more people my age and with the same taste as me art starting to move in. It looks like more tax dollars are going to fix the sidewalks and streets. Nicer stores are opening up. Of course, when I moved into this apartment, it was not a pretty sight. It was really dirty and infested with bugs. I talked to different people about what to do. I had a lot of success with Combat roach bait…
