I’m at the Inman Real Estate Connect conference all day today and promise to have something interesting to report later today.
Until then, straight from Matt Woolsey of Forbes.com comes the 10 Most Expensive Cities for Renters. Average rents provided by Marcus & Millichap.
New York, N.Y.: $2,922
San Francisco: $1,904
Boston: $1,658
San Jose, Calif.: $1,612
Los Angeles: $1,452
San Diego: $1,304
Washington, D.C.: $1,302
Miami: $1,080
Philadelphia: $1,014
Chicago: $1,010
Just a reminder that it’s not too late to register and check out an amazing group of speakers at this year’s Inman Real Estate Connect Conference.
I’m speaking on a blogging panel tomorrow morning at 9:45 Beyond the Written Word: Videoblogging and Podcasting. I’m looking forward to particpating on this panel but more excited about the various workshops and presentations that are scheduled for this year’s event which goes through Friday. The Housing Debate: Bull Vs. Bear marries a superstar panel organized by my friend and fellow blogger Noah Rosenblatt of UrbanDigs.com and proves to be well worth the visit!
Hope to see you there!
So here’s the update on yesterday’s post I May Be Buying Again. Last night at 5PM. my wife and I visited the 3BR/3.5BTH Condo with a gorgeous eat-in kitchen, W/D, a formal dining room, and a corner living room with open river views. We were not alone. The apartment was packed with prospective purchasers who all seemingly wanted this apartment. Some were already measuring for their furniture and discussing the neighborhood. All had looks of disdain for the others as they spoke in whispers about how they would make this apartment "theirs." It was a scene reminiscent of last Winter when buyers often became manic with thoughts of "beating" others to "win" properties in bidding wars. The difference between last night and last winter was the asking price.
Anyone who reads this blog knows that I am a huge fan of pricing property aggressively to appeal to the broadest segment of the buying pool. This is precisely what the agent representing this 3BR condo has done and his sellers are going to reap the rewards of an efficient sale (highest price in quickest amount of time…about 4 days) because they listened to him regarding pricing. By setting an asking price of 20% less than market value (my opinion of course but I think i know my market), the seller’s and their agent have done what few have been able to do in this somewhat stagnant market and that is bring in a plethora of bidders.
If negotiations for this apartment are handled properly and they indeed proceed immediately to a highest, best and final offer over the asking price scenario, then this property will sell for exactly where the market says it should. If you’re a seller, what more can you ask for than that?
By the way, my wife were only prepared to pay the asking price because at that number it was a deal in my mind, even if we are heading into a recession which remains to be seen. We also decided to remove ourselves from the bidding because we just aren’t ready to give up the amenity-rich environment of our current building. With a 4 and 6 1/2 year old, it would be too painful to give up the pool, playroom, basketball court, and gym that we have all grown so accustomed to. So for now, we stay where we are…HAPPILY!
Just a quick note that my phones are ringing considerably more than last week and there seem to be more buyers coming to the table ready to buy property, me included (see below). Inventory remains low however and we still aren’t seeing many "deals" hit the market. That said, occasionally an apartment comes on the market that is drastically under priced. Call it a sales tactic, call it agent incompetence, call it whatever you want. I choose to call it an opportunity and yes one such opportunity has presented itself to 3 of my clients. Fortunately for me, none of these 3 buyers are interested in this particular property so today at 5PM, my wife and I are going to take a look totally prepared to jump at this opportunity.
This isn’t the first time in my 16 years that such an opportunity has presented itself. Twice in the last 7 years, my wife and I purchased apartments that I stumbled upon while searching for my clients. On both occasions, I notified my clients that if they weren’t interested in the properties, that I was and that I intended to bid on them if they didn’t. The first was a 2BR/1.5BTH Co-op that had been on the market for 5 months in an incredibly hot market. The listing had become "stale" with very few agents showing and many thinking that something was wrong with the apartment. There was nothing wrong with it and thus my wife and I made it our home for 3 years having our son there. We had no intention of leaving that apartment even after we discovered that our daughter was on the way. Fate had other plans. Again, I had the fortune of showing a 3BR/2BTH condo to yet another client of mine who decided that the space wasn’t for them. It was DEFINITELY for US! I quickly called my wife who darted up from her job in Midtown to immediately agree with me that this would be the perfect home for our soon to be family of four. We bid and after a heated bidding war (they actually did a two full page spread story in the NY Post about this) we "won" the privilege of purchasing our current home (I had buyer’s remorse for 2 months!).
So fast forward to this morning. In my relentless search for my current buyers, I stumbled upon an incredible condo with stunning views that is priced at only $1100/sf! Today at 5PM I will see the space with my wife and I suspect we may be moving in the next few months unless I lose this bidding war. I will keep you posted.
My point to this story is that I’m not afraid to sell and buy in this market based on the idea that my family will likely call this place home for a long time (maybe not based on how frequently this type of scenario happens to us). Mortgage rates are incredibly low right now and I firmly believe that owning a bigger piece of Manhattan real estate is never a bad idea (unless you are forced to sell in a bad market…if that may happen to you, then don’t buy).
With 2008 upon us, many are making predictions about the direction of the economy and more specifically the health and well-being of the Manhattan real estate market. In lieu of specific predictions, here are some current links that may shed some light on what may lie ahead on both the national and local housing fronts:
And here are a couple of links just for fun:
Straight from my Inbox are the highlights and key takeaways from the 4th Quarter report courtesy of Prudential Douglas Elliman via Jonathan Miller of RadarLogic and Miller Samuel Appraisers:
Overall Manhattan Market [includes entire island]
In the final quarter of 2007, the Manhattan real estate market continued to see gains in most market indicators, consistent with the prior three quarters including increased price levels, increased number of sales and a decline in inventory as compared to the same period in 2006.
Price levels were generally up this quarter, with the greatest price gains seen in larger apartments, specifically 2-bedroom and 3-bedroom units with 22.1% and 39.8% gains respectively over the same period last year, with a portion of the increase in price attributable to an increase in the size of the units actually sold.
-The median sales price increased 6.4% to $850,000 over the prior year quarter result of $799,000 (1.7% below prior quarter result of $864,397).
-The average price per square foot increased 18.2% to a record $1,180 over the prior year quarter result of $998 (3.1% above the prior quarter result of $1,144).
-The average sales price increased 17.6% to a record $1,439,909 over the prior year quarter result of $1,224,840 (5.1% above the prior quarter result of $1,369,486).
– The number of sales increased 3.2% this quarter to 2,518 units as compared to the 2,441 units sold in the prior year quarter.
– Listing inventory fell 13.5% to 5,133 units from the prior year quarter total of 5,934 units.
– Days on market was 131 days this quarter, faster than the 149 days seen in the same period last year but 8 days slower than the 123 days last quarter.
– Listing discount was 2.7%, essentially unchanged from 2.8% in the same period last year, but higher than the 2% last quarter.
Co-op Market
-The median sales price of a co-op this quarter was $675,000, up 3.8% from last year at this time. Average price per square foot increased 21% and average sales price increased 9.1% from the same period last year reflecting higher price gains at the upper end of the market.
-Inventory levels for co-ops fell 26.2% to 2,254 units as compared to the prior year quarter total of 3,054 units. Co-op listings are comprised of nearly all re-sales.
Condo Market
-The median sales price of a condo this quarter was $1,100,000 this quarter, up 6.8% from last year at this time. Average price per square foot and median sales price showed 10.6% and 17.8% gains respectively from the prior year quarter reflecting higher price gains at the upper end of the market.
-Inventory levels for condos totaled 2,879 units, unchanged from the prior year quarter total of 2,880 units. New development added to the market offset the decline in re-sale listings.
Luxury Market (upper 10% of all co-op and condo sales)
-The median sales price of a luxury apartment this quarter was a record at $4,300,000 this quarter, up 28.4% from last year at this time and up 8.9% from the prior quarter. Average price per square foot and average sales price showed similar 29.8% and 32.8% gains respectively from the prior year quarter.
Loft Market (co-op and condo sales)
-The median sales price of a loft apartment this quarter was $1,445,000 this quarter, up 3.6% from last year at this time. Average price per square foot and average sales price showed 18.3% and 11.3% gains respectively from the prior year quarter reflecting higher price gains at the upper end of the market.
I choose to ignore "averages" as they can be greatly skewed by increased activity in the luxury market. But there are some interesting things to note from this report.
MY Key Takeaways that can’t be ignored (IMHO):
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Median sales price up 6.4% from same quarter last year but down 1.7% from 3rd quarter of this year. It remains to be seen as to whether or not we will see a trend in decreasing median prices.
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Listing inventory decreased 13.5% from same period last year (no wonder prices remain strong)
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Days on market increased from 123 to 131 days from 3rd Quarter.
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The listing discount increased to 2.7% from 2% in the 3rd Quarter.
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Median co-op prices increased a modest 3.8% from same period last year.
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Median condo prices increased 6.4% from same period last year.
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Luxury demand continues to be off the charts with median prices increasing a whopping 28.4% from the same period last year. Credit crunch obviously isn’t affecting the wealthy…yet.
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Median loft prices increased a modest 3.6% from the same period last year.
Delving further into the report and comparing 3rd and 4th Quarter numbers we see the following:
- Overall median sales prices dropped 1.7%
- Overall number of sales dropped 28% from 3rd to 4th Quarter
- Inventory dropped 1.4%
These are the facts. Spin them anyway you like but my sneaking suspicion is that the first 6-8 months of 2007 were where most of the big gains were seen. And again, averages schmaverages! They mean absolutely nothing to me when discussing such a unique real estate market made up of so many micro markets.
Well I knew that the day would come when a voice on the other end of the phone would say, "We’re in a holding pattern because my bonus wasn’t anything like I thought it would be." That day has indeed arrived as one of my team members informed me that he received just that phone call last week from one of his buyers who was in line to purchase a $2,900,000 property at The Rushmore. This particular buyer was looking at a $2.2M property and based on his bonus expectations increased his budget more than 30%. His expectations were not in line with those of his bank and he and his wife have now decided that 2008 may not be the year for them to buy their dream apartment.
The question that lingers in many of our minds is how many "casualties" like this will we see in 2008? On the flip side of this story are buyers who have received record bonuses but wait patiently to see how the market shakes out in the coming weeks instead of jumping on whatever inventory exists at whatever price. The psychology seems to have shifted significantly from the same period last year when money seemed to be burning holes in people’s pockets and they just couldn’t wait to snap up whatever suitable inventory they could find. This year is different. Although inventory remains incredibly low, buyers are exercising more patience. There are still a plethora of buyers ready, willing and able to purchase a new home but there are many fewer who will settle for simply "suitable" as they appear ready, willing, and able to wait for the "right" home that more completely suits their needs.
For sellers of special properties (ex. Prewar Classic 6, 7, 8, and 9’s), don’t worry! Your homes are exactly those for which these patient buyers wait. Just be smart when you bring them to market and price them attractively to appeal to the broadest pool of buyers. For these sellers and those in the ultra luxury market ($5M+), 2008 should be another solid year for Manhattan real estate.
Wishing you and yours the very best of health and happiness in 2008 and beyond. Be back tomorrow.
I’m still away and blogging from my Blackberry thanks to technology. Just felt the need to report that this week is proving to be another busy one as it has been in the past several years. The weeks leading up to Christmas were eerily quiet this year and my team is quite busy this week fielding property inquiries and doing showings for sellers and with prospective purchasers.
Of course this is anecdotal particularly as I have no idea what’s happening with my colleagues but it seems that demand is increasing while supply remains stagnant. I(‘s going to be an exciting beginning to 2008!
I think that just about covers it all. I’m off to spend the holiday’s with my family and won’t be back until next Friday.
Thank you all for a wonderful year and I wish you all the best of health and happiness in the New Year.
