Frequent readers of TrueGotham know my feelings about the national housing market. There is NO SUCH THING as a national housing market! I have repeatedly defended the fact that the country and even each local market is made up of a plethora of micro-markets. For example, take the recently released market reports from the major brokerages (via Curbed). If you were to break each of this up into the micro market neighborhoods that comprise Manhattan, you would see different trends in different areas. Perhaps one neighborhood has seen double digit price appreciation while another neighborhood remains flat (just speculating here based on anecdotal evidence). A solid example of the erratic behavior of housing’s micro markets is beautifully displayed on Carol Lloyd’s SFGate.com in A seller triumphs in a bad micro-market’s micro-bloodbath as she describes the effects of speculating in San Francisco’s suburb of Antioch:
In April 2006, the market continued to rise — one house at 4601 Mendota Way sold for $650,000. The price wavered slightly that year: In late 2006, an identical house — 5347 Southwood Way — sold for $641,500. In November 2006, that model of home hit its highest price when 4592 Imperial Way sold for $720,000.
Since then, this particular example of the American dream has seen better days. By March of 2007, one of the models at 4599 Menona Drive sold for $644,000. This month, the sale of 4561 Mendota closed at $363,000. The number of upgrades can influence the pricing slightly. In this case, it makes the drop in prices look even worse, because 4561 Mendota, according to Strausz, had an extra $35,000 in upgrades. For it to work as a comp for the other homes, the value should be closer to $328,000.
What’s the bottom line? Since its their high of $720,000 less than a year and a half ago, these particular models of Antioch homes have fallen a whopping 55 percent.
This 55% percent drop in this micro-market is NOT in line with the overall San Fransisco market and some in the area are even seeing as many as 20 offers on a single property:
Thus, one might brandish the latest figures suggesting that San Francisco Bay Area markets were cooling since there was a 20.4 % dip in median price between February March 2007 and February March 2008, but a real estate professional could counter by mentioning a recent San Francisco listing that garnered not less than 20 offers.
This is an excellent illustration of how broad market numbers can’t possibly portray an accurate picture of what is happening across all micro-markets in any given area. Although most of what is posted here and on other blogs like UrbanDigs, Curbed and Matrix is anecdotal, it can’t be ignored that the Manhattan real estate market is a complex and sophisticated conglomerate of multiple markets (both geographically and financially) that often times behave completely independent from one other.
Most of my readers know how important I feel proper pricing is when selling your home. But don’t just take my word for it. My friend Jonathan Miller of Miller Samuel Appraisers and blogger of Matrix appeared last week on Reuters TV. Here’s what he has to say on pricing in today’s marketplace:
- Listed within 3% of market value) = SELL.
- Listed >3% of market value = fodder for listing catalogues.
Here’s the entire clip Of Jonathan’s take which also includes a sound bite from another colleague and friend, top producer Ann Cutbill Lenane:
The Art of Pricing remains the primary determining factor to whether your home sells or not.
Welcome to the 86th edition of the Carnival of Real Estate. I’m absolutely thrilled and honored to be hosting the Carnival for the second time and want to especially thank Drew for the opportunity again. There were a plethora of submissions to read and it is a difficult task always in deciding who makes the list and who doesn’t. A huge shout out to BlogCarnival for providing their new and awesome Carnival Editor Beta which made this time hosting a true breeze! Thanks also to everyone who submitted. Here are my 15 picks of the week in an effort to remind all of you out there that tomorrow is April 15th.
MY PERSONAL FAVORITE: Not just the rule in Tallahassee Joe Manausa presents Selling Your Home – Single Most Import Fact You Must Know posted at Tallahassee Real Estate Blog. He reminds us that buyers are the primary factor in determining the value of our homes.
An excellent source on obtaining your credit score without falling for any gimmicks as Raymond presents How To Get Your Free FICO Credit Score posted at Money Blue Book.
Ned Carey addresses all those late night infomercials granting false hope to those who want to invest with "no money down."Check out Can I Really Invest in Real Estate Without Money? posted at Baltimore Real Estate Investing Blog, which says, "A post to get you thinking not just about money but what other resources do you have."
I know about the changing face of the mortgage market all too well…Joe Peffer presents Pre-Approved? Think Again, You May Not Be. A Cautionary Tale posted at Columbus Real Estate Notes on Homes for Sale, the Columbus Market, and Home Buyer Help, saying, "active buyers need to keep one eye on the market and the other on their pre-approval as the mortgage market changes almost daily these days."
In the 2nd part of a 2 part series MoneyNing presents Be Human and Buy a Home posted at Money Ning, saying, "Buy a Home now!"
In one of the most eloquent blogs I’ve ever read Larry Walker presents Your Money or Your Life posted at Larry’s Take on the Cocoa Beach Real Estate Market, saying, "How good must the deal be to forget that tired old mantra; location, location, location?"
Helen Anderson presents 5 Tips for Buying a Home in a Down Market at Best CD (Certificate of Deposit) Rates, Money Market Rates, High Interest Accounts posted at Bankaholic.
An excellent insight into what goes on behind the scenes when qualifying for a mortgage as Silicon Valley Blogger presents How Do You Qualify For A Mortgage Loan? posted at The Digerati Life.
Nigel Swaby presents 0 Down Mortgages Headed for Extinction (they’re NOT extinct already?)posted at Salt Lake Real Estate Blog.
Sarah Mann presents Does Size Really Matter? posted at Zillow Blog
Eric Bryant presents Every “Real Estate Batman” needs a “Geek Estate Robin”! Unless they want to fade away… posted at GeekEstate Blog.
Trevor Mauch presents HousingMaps.com – A Cool Way to Find Properties On Craigslist? posted at Real Estate Investing Brain, saying, "Article on a great tool for helping you find properties on Craigslist. This is a map integrated with Craigslist listings to make it very easily searchable for properties by city and price."
Jessica Donnovan presents Marketing Your Real Estate Business Online posted at Real Estate License.
Mike Mueller presents Will Brent Bring Down Zillow Mortgage? posted at Mike’s Minute… "The danger of Zillow’s Mortgage Marketplace – with a comment from David G from Zillow"
Life. Money. Development. presents The 7 Attributes of Leadership posted at Life. Money. Development., saying, "An excellent presentation of the attributes every leader should have."
That concludes this edition. Next week’s carnival will be hosted by Reachd. Submit your blog article to the next edition of carnival of real estate using the carnival submission form. Past posts and future hosts can be found on the blog carnival index page.
Technorati tags: carnival of real estate, blog carnival.
UPDATE Friday, 3/18: Drew Meyers just interviewed me about my experience with the CoRE, blogging, and the Manhattan real estate market. Here’s the…
complete with an iTunes link
In the immortal words of Poltergeist’s Carol Ann…"WHAT’S HAPPENING!?!!!" The market she is a changin’ as tighter lending standards, more savvy consumers, and overly cautious co-op boards sculpt the new face of Manhattan residential real estate. Here are examples some bizarre behaviors and the players that exhibit them in today’s marketplace:
- Managing agent emails us this morning stating that the building in which we are representing purchasers will only accept 30 year fixed rate mortgages…NO exceptions.
- First time buyer calls to ask if another co-op will accept 90% financing…good luck even finding a bank much less a co-op that will these days.
- A buyer signs a contract after a 3 week negotiation and informs his attorney of his arrest record. The attorney wants to make the record part of the contract so that WHEN the board turns her client down, he would not be considered in default…moving on to the next bidder.
- Bank calls client and informs them that they will no longer be lending them the money they promised in the commitment letter because they can’t repackage the loan and sell it.
- Buyer contacts my seller directly in an attempt to strike "a better deal by eliminating the brokers." Buyer also bids and asks to put down $5000 contract deposit on a $2M property (standard is 10%). Seller explains that commission must be paid regardless so she should reach out to me. She then reaches out to her own agent whom she also circumvented.
- Above buyer’s attorney is a litigator and spends most days in court unable to respond to seller’s attorney.
- Managing agent takes 5 weeks to process a Board application. If you think this is typical, then you need to hire Hoffman Management and work with Gordan Noah who can turn a package around in 24-48 hours. He’s a stud!
- Many buyers asking for mortgage contingencies and sellers remain reluctant to accept this.
- 6 contracts fall through on one property for a variety of bizarre reasons none of which have anything to do with the property or building itself.
- Simultaneously, bidding wars take place and multiple properties go to contract significantly over the asking prices.
- Agent uses horrendous photos of property from 7 years ago to market a very high end property. Despite my client’s and my better judgement, we view the space anyway only to find it is a STEAL with glorious views (not marketed as such) and has been completely renovated.
So it is indeed a bizarre environment in Manhattan residential real estate right now. Deal flow continues but not without sometimes very odd challenges along the way. Navigating all of this provides a wild ride! My head hurts!
Whether at a cocktail party, a birthday party or school event for my son or daughter, or just a casual dinner with friends, never has the conversation been more real estate centric. The media across the country continues to bombard the consumer with reports of many declining housing markets while Manhattan media has pointed out just how bullish our market has been only recently chiming in with the possibility that we’re not immune to greater market forces. Having said that, the local Manhattan residential real estate market is itself a compilation of multiple micro markets with not only each neighborhood behaving independent of the rest but 3 separate and seemingly independent tiers of market activity.
- Tier 1-The Sub $1M Market: Obviously buyers and sellers who are trading property valued at less than $1M. Inventory is comprised of mostly studios and 1BR’s with some 2BR’s. Buying pool contains many first time home buyers. This market has remained quite active as far as I can see with the last 3 sellers that I have represented going to highest, best and final offers and selling at or significantly above their asking prices. These buyers also seem to be the most skittish.
- Tier 2-The Middle Market: This is the meat of the market in my opinion and consists of those trading property in the $1.5M to $5M price point. My Spring market is late to bloom this year but there is anecdotal evidence that this market seems to be picking up yet again in preparation for another busy season as more of these buyers and sellers are reaching out to me to discuss up-sizing, downsizing and lateral moves. I have many sellers coming to market in the coming weeks and buyers who have been on the sidelines who seam to be ready to jump for the "right thing." I also think that this tier has the greatest segment of Wall Street buyers who are most greatly effected by the financial anxiety to which they work so closely. Despite that anxiety, I have a fellow from Bear Sterns interested in one of my current properties and several Wall Street buyers still waiting for that nearly perfect place.
- Tier 3-The Ultra-Luxury Market: 71 properties over $10M closed in the first quarter of 2008 at 15 CPW and The Plaza. That segment of the market has seen sales volume increase more than 300% YoY. Those are huge numbers that heavily weigh on averages but also show that the wealthy have a great deal of confidence in Manhattan real estate. These buyers aren’t typically looking for a "deal" as much as they are seeking quality of the product. Most of the buyers I have worked with in this price point also see their home, whether it be a primary residence or a 3rd or 4th home, as a place to hang their hat first and a part of their portfolio second (barring the investor or flipper of which Manhattan has fewer than other markets in the country).
It remains to be seen how exactly our local market(s) will be effected by national housing trends, economic reports, and financial worries countered by the desire to make Manhattan one’s home. Whatever happens, I don’t think we can count on the same buyer or seller behavior across all three tiers. One thing you can count on is that people will continue to love Manhattan and owning a piece of it will remain a strong desire by those who can afford to do so.
The 85th Carnival of Real Estate has been posted at fellow blogger Jim Duncan’s RealCentralVA. Check it out.
The Carnival of Real Estate #86 will be posted right here at TrueGotham next Monday, April 14th…and don’t forget your taxes!
A potpourri of stories from around the country to right here in our own backyard:
I know I’m a day late but yesterday was another very busy day and I didn’t have an opportunity to post any data. Yes…that’s right, I’m busy again. I’m swamped today too. So this time around, I’m going to simply defer to the master of Manhattan residential housing numbers, Jonathan Miller who shows precisely how fascinated New Yorkers are with their real estate (check out his insight and the links he has provided). And if you want to continue following all of the media coverage, Jonathan has that covered too.
The reports continue to baffle me as each major company has provided very different numbers from what should be the same data set. There has been talk about the inefficiencies in housing reports before and I remain puzzled.
Yes indeed there is yet another house being raffled for $100 per chance. Remember the SanMar House Raffle? That was a smashing success raising over $200,000 for the SanMar Children’s Home while allowing the sellers to get the $380,000.00 for which the home was appraised. This time the 2900sf home belongs to a NJ woman who is raffling the home on eBay. From WCBSTV.com:
Looking for a house in New Jersey? How about four bedrooms, a huge living area, cathedral ceilings and a stone fireplace for, say, $100?
"One hundred dollars, yes," owner Sharon Hart said.
Say hello to Hart and her 2,900 square-foot ranch home in Willingboro, which admittedly could use a coat of paint, but is now available on eBay, she says, for the rock-bottom price of $100.
The obvious question: Why?
"Well … I had the house on the market for about two-three years. It’s not selling so I need to get rid of the house. I cannot afford it anymore," Hart said.
Now of course there is a catch. Not a big one, but a catch nonetheless.
"The house is being raffled off," Hart said.
That’s right. Hart says the house will be sold via raffle on eBay — $100 per entry. And who knows how many hundreds or thousands of people are competing for it?
When asked how much money – or entries – she needs, Hart said, "About 2,000 people to purchase the tickets. To pay the mortgage off."
If Hart doesn’t get what she wants, she says she’ll keep the crib and return everybody’s money. If she does, she says somebody will be getting a house – for a C-note.
Hart says the raffle will be drawn on May 1.
Good luck Ms. Hart. Several people from across the country have emailed me and commented on TrueGotham that they too would like to raffle their homes. Both of these seem like viable options but I have a strong preference for the SanMar way where a charity benefits from the sale as well.
Are we going to see a trend here?
For tips and advice on conducting your own raffle, check out How To Raffle Your House.
Yesterday I broke down exactly for what a seller’s agent is paid and today I will discuss what a buyer’s agent performs in that same real estate transaction for their 50% share of that 6% commission. For this segment, I elicited the help of my friend and colleague Noah Rosenblatt, a successful buyer’s agent at The Halstead Property Company who is also a fellow blogger of UrbanDigs.com. Noah and I have developed a friendship over the past couple of years as we both share the desire to make the residential real estate process more transparent and more honest.
Here’s Noah’s take on what a good buyer’s agent should perform:
Buyer’s Agent 3% -(directly from my InBox from Noah)
I must admit that the majority of my sales business is on the BUY side, representing first time buyers or even veteran buyers who are seeking to upgrade. The consistent feedback I get from my buyer clients regarding the level of service that is both expected and wanted, is that they want unbiased, value oriented consulting to determine a best of breed product in a particular price point. Buyers actively tell me that my focus on profit potential at resale is what they admire best when I go and view a property.
Its a product to me and buy side brokers should focus on property quality, property valuation, profit potential, individual scalability, comps analysis, bidding strategy, negotiating, and providing a smooth process from contract signing to closing. In addition, I usually consult my buyers on the anticipated closing costs, renovation ideas & costs, and the loan/rate process. Having an unbiased and product oriented focus while you view 10+ properties is sometimes hard to do, but buyer brokers must adapt to what the buyers’ needs are and take in what they like and don’t like about a specific property as you view with them. In the end, this allows the buyer broker to fine tune their strategy for that specific client and actively look for a product that not only is the best value in the price point, but also one that can extend a time-line to own and offers the best resale potential for down the road.
The days of sugar coating an overpriced property to get a quick deal are done and will only insult the buyer’s intelligence and result in a lost client!
Having worked with buyers from all walks of life, I would agree with much of what Noah suggests and it is obvious to me that he excels with buyers from the financial world who really view their property as part of their overall portfolio. But I have to wonder how many buyers out there feel like they are getting this level of service? And the bigger question is that I wonder how many seller’s feel like the buyer should be paying this 3% side of the commission?
Now it’s true that a buyer’s agent takes part in the negotiation process and the preparation of a Board application in the case of a Co-op sale but both of these responsibilities are aligned with the buyer’s interests so why is the seller paying their commission? I have long been a proponent of a change in commission structure but for now we work with what we have and that is a system where a seller pays a buyer’s agent for all of their time and hard work leading up to the showing of their property as well as the responsibilities that the agent incurs from the point an offer is made to the closing table and beyond. For the record, I don’t think buyers have reached the point where they would be comfortable paying for an agent’s services but if more agents work like Noah, that may change.
