A quick morning check of Manhattan listing inventory yielded the following information:
- There are currently 7,784 active Manhattan property listings (inclusive of co-ops, condos and townhouses)
- Summer inventory: June saw 795 new listings, July 901 and August 1058.
- From Labor day to 9/8/2007, 65 new properties hit the market.
- Last week saw an additional 301 new properties hit the market.
Although there is a definite trend towards increasing inventory, anecdotal evidence is showing that many buyers remain frustrated as they patiently await their opportunity to buy. Patience is key here. With talk of a possible recession, the anticipation of weak Wall Street bonuses and layoffs, there could indeed be a buying opportunity right around the corner for many of these patient purchasers.
The Townhouse Report is back and the numbers are staggering. And to think 10 years ago I showed a client a Harlem Townhouse for $130,000. I should have bought it myself!
Bradley Hope of The New York Sun reports this morning that the Market Tilts to Buyers of Real Estate. A catchy title indeed but I and my colleagues have plenty of frustrated buyers who sit patiently on the sidelines awaiting some increase in inventory. These buyers and their agents aren’t feeling any "tilt" toward a buyer’s market. Having said that, Mr. Hope could indeed be on to something regarding to predictive nature of developer’s behavior:
Incentives to lure buyers are increasing in new developments in some neighborhoods of Manhattan and Brooklyn. At a new 45-unit development in Hell’s Kitchen — which has seen price tags cut on 11 units by as much as $50,000 since March — the developer is offering to pay the closing costs that are traditionally shouldered by the buyer. Closing costs, which include state and city transfer taxes, and fees for the brokers and lawyers, add up to thousands of dollars. For example, a two-bedroom unit at the building, at 517 W. 46th St., has an asking price of $1.4 million, with closing costs of about $30,000.
At the Lenox Grand in East Harlem, the developer is advertising an even more generous deal: In addition to paying the closing costs, it will pay two months of maintenance and the first month of common charges and insurance, according to the building’s Web site.
In Williamsburg, the Maspeth, a 24-unit condominium, is offering a deal for buyers under which the developer will pick up the closing costs and also help qualified buyers secure a $10,000-down mortgage. (NOW THAT’S FRIGHTENING!!!)
Are these incentives an attempt by some developers to sell their projects out ahead of what some believe could be a national recession? Perhaps these are just anecdotal stories specific to struggling development projects only? The new development projects that I have been visiting aren’t offering such incentives as they have managed to control inventory and maintain a steady stream of buyers for that inventory.
Again, the question here is whether or not these particular developers are panicking or simply adjusting their marketing strategy based on their own economic forecasts for local housing. Developers aren’t immune to anxiety and therefore panic, so that could indeed be the case. I would keep my eyes on the big experienced developers like Related and Extell. If they start offering incentives, cutting prices, or even talking about restructuring buildings into hybrids (combo of rental/condo) to hedge the market, then we should all pay very close attention. As of now, I see no signs of that happening. In the meantime, some buyers will reap the rewards of the small developer’s anxiety.
Happy New Year to all of TrueGotham’s Jewish readers (although most won’t be reading today). For those who aren’t Jewish, Rosh Hashanah is the beginning of the Jewish New Year and the beginning of a period of reflection, introspection and atonement for the mistakes made the previous year. The 10 Days of Awe leading up to Yom Kippur are an opportunity to seek reconciliation with those who one may have wronged in the previous year.
The impetus for this post today is this article from Peg Brickley at RealEstateJournal.com. A disturbing article about thousands of homeowners facing foreclosure because of American Home Mortgage’s bankruptcy.
Thousands of homeowners face an "imminent risk" of losing their homes because of clashes between American Home Mortgage Investment Corp. and its former financial backers, according to Freddie Mac, a government-chartered housing financier.
In documents filed with the U.S. Bankruptcy Court in Wilmington, Del., Freddie Mac said it seized $7 million that homeowners sent to American Home to cover principal and interest payments, property taxes and insurance just before the company’s Aug. 6 collapse. American Home quit making payments to tax authorities and insurance companies Aug. 24.
Some serious reconciliation needs to be considered here and I don’t have any answers. It just seems insane to me that homeowners could lose their homes solely based on their mortgage company. Any thoughts from the financial gurus out there on how this may play out?
I have always recommended to my prospective sellers that they interview multiple agents when determining who is best suited to represent them with the sale of their home. One of the reasons for this is to get some collective concept of what the proper value of the home is in the current real estate market. In this week’s OpenHouseNYC segment, New York Magazine’s popular Triple Assessment feature leaps from the page to the TV screen to further support my reasoning:
In our partner segment with New York Magazine, Open House NYC host, George Oliphant meets Jhoanna Robledo, editor of NY Mag’s Real Estate Section for a video version of their popular feature, Triple Assessment.
Triple Assessment is an appraisal from three brokers on the proper price of an apartment about to hit the market. Going by 3 factors of reading the market, valuing the property and what prospective buyers might tell them, New York Magazine asks three real estate brokers to name a price for a new listing. In this special video edition, Jhoanna invites her coterie of brokers to 55 White Street to appraise a Tribeca studio apartment.
The apartment has very high ceilings and great natural light, but it is only 600 square feet, so how will that impact the broker’s price estimates?
Click the video to see how brokers price the apartment and then find out how close they got to the actual listing price.
Three experienced agents with solid reputations for success in the industry come up with a range from $715,000 to $825,000. So what is a seller to do? This seller selected an agent to market the property in early July at $815,000. It was reduced to $785,000 in mid August and is still available per the agent’s website.
My advice to all sellers: If you are going to take the time to interview multiple agents to market your property, also take the time to request and review the exact data that was compiled to come to the suggested asking price. I am a big believer in selecting comparables that actually have an accepted offer, signed contract, or have been recently sold and closed. Properties that are currently active on the market should be considered only as a gauge of inventory. As is obvious from this Triple Assessment, asking prices can be all over the map are are NOT an indicator of the value of your home.
Reflect and Remember…
Peter Comitini at Comitini.com has a 5 year 9/11 photo journal that can help you do just that.
From the September Real Deal comes an excellent piece from Alison Gregor on How the Sub-prime Fallout Will Effect Real Estate Pros.
Since delinquencies among sub-prime loans that had been packaged and resold on secondary markets reached fever pitch this summer, there have been tremors in not only the New York City residential real estate market, but in the thriving commercial one as well.
The era of cheap credit has unraveled quickly, as a crackdown on risky loans has tightened standards among all lenders. The fallout has affected all parts of the New York City real estate food chain. It’s hit residential sales brokers, some of whom have seen their deals jeopardized as lending terms change and interest rates rise, as well as developers of office buildings, who are finding it more difficult to obtain financing from lenders.
Others, like commercial brokers, real estate attorneys and new development marketers, have also felt an impact. The Real Deal set out to capture the reaction to the sub-prime mortgage debacle and credit crunch from individuals on the front lines in several sectors of the New York City real estate industry.
Definitely worth the read.
Reading this piece brought back memories of a Board turn down that one of my sellers experienced several months ago and how clairvoyant the Board seems in hindsight. Some may recall that the buyers had received official written Board approval for the purchase of the 2BR co-op and between receiving the approval and closing they decided to change their mortgage product without sharing this detail with anyone. They switched from Citi to Countrywide and the Board was displeased with both the last minute change and the terms of the loan with Countrywide. Of course we all know the issues with Countrywide these days. Did someone on that Board have a crystal ball? Who knows. What I do know is that I feel like I owe that Co-op Board an apology for my tirade that went like this:
Co-op Boards are sometimes made up of people who don’t wholly understand the processes in which they are involved. These purchasers changed their lender which happens all the time and they are actually getting a better rate and better terms that should be more favorable to the Board. I suspect that some Board members are reading way too much about the sub prime mortgage market implosion (which doesn’t apply at all to this situation) and are reacting to the fact that they are familiar with Citimortgage and perhaps not so with Countrywide? Again…pure speculation on my part as a real estate professional and former board member. Who really knows what they are thinking?
So I apologize because it seems this particular co-op Board knew exactly what they were doing. Not to mention that I have since sold and closed that property for almost 20% more money. My lesson here: Co-op Boards may indeed be in large part the reason that the sub-prime meltdown isn’t crushing our local real estate market and for that I am incredibly grateful.
I have penned with some frequency about the many inefficiencies that exist in the New York City real estate market and the frustration continues with property managers. My team and I seem to be hitting a wall with numerous property managers when inquiring about building policies and amenities. Now in my 16th year as an agent in the Manhattan residential real estate market, I have created a 2 page questionnaire for managing agents to complete in an effort to make the information gathering process more streamlined and efficient. Almost all managing agents see the benefit of this (primarily it decreases the number of phone calls with questions and the prevents the dissemination of inaccurate information) and have embraced the completion of this questionnaire. Some however continue to protest and make the information gathering process terribly inefficient.
Last week we signed an agreement to represent a seller of an apartment in an Upper West Side apartment building that has had a complete changing of the guard in terms of the Co-op Board. The very nature of Co-op Boards makes not only the Board itself, but the building policies on such things as guarantors, subletting, flip taxes, and pied a terres quite dynamic. Even amenities can change within months of of previous sale so it’s imperative that we gather complete and accurate information regarding all policies and amenities each time we represent a new seller in any given building. Buyers will accept nothing less and accurate and complete information makes the overall transaction process a smooth one with no surprises and therefore no financial ramifications for the parties involved. So what does a broker do when they make every attempt to gather this information, often times with the assistance of the shareholder, to no avail? This is precisely what I and my team are in the midst of right now.
A very large (award winning even…go figure…many of the shareholders they represent are puzzled by the "award winning" status after dealing with them) management company has not only charged us $100 to complete our questionnaire (much more typical these days than in the past and no big deal) but they have sent back answers in a piece meal fashion and still have left some very important questions unanswered. We are in our second week of marketing and just finally learned that there are currently no assessments. Thankfully we received building financials yesterday after waiting 10 days. We are still waiting on some official word on the building policy on pied a terres as it has changed several times in the past as well as their policy on open houses. There has been no lack of effort on our part to have these questions addressed and just yesterday we were informed by the managing agent that she has 7 business days to respond to our inquiries. It has been 10!
I absolutely appreciate that many property managers (most in fact) are over worked and underpaid but I am offering them an efficient means of providing accurate information and still some protest. It makes no sense to me. So if any property managers are reading this post (I doubt it) please let the brokerage community know how we can make your lives easier and in turn how we can best inform prospective purchasers of "current" building policies and the like? We really don’t want to make your jobs more difficult but we do owe it to our sellers and our buyers to accurately represent the property that we are selling. If I’m not mistaken, you’re job is to provide the information to help us do that?
So if your a seller, don’t be surprised if you are asked by your agent to get involved in the information gathering process and don’t assume that all the rules in your building are the same as when you purchased.
If your a buyer, don’t shoot the messenger. I and many of my colleagues do the absolute best we can to provide you with complete and accurate information regarding current building policies and amenities. We are only as good as our source so be sure to have your attorney confirm all of the information that you have been provided.
By the way, we procured another listing last week from a building managed by Hoffman Management (they managed my last co-op). Gordon Noah of Hoffman completed our questionnaire within 24 hours and has received NO email or phone correspondence from us since (except a thank you of course). We love Hoffman!
UPDATE: 2 weeks on market and although we have accepted an offer on this property we have yet to recieve the co-op questionaire that we paid to have completed. Frustrating process sometimes.
Note some key takeaways and quote from PropertyShark CEO, Ryan Slack:
• Sales Volume: The market for NYC walk-up apartments was very active in the second quarter of 2007, with 21.14% more transactions than the first quarter of 2007 and 14.58% higher than the second quarter of 2006. Total sales volume almost reached a record $1.4 billion.
• Price/Sq Foot: The price per square foot for New York City walk-up apartments remained at 2-year highs ($187/ft) this quarter, a 27.59% increase compared to the second quarter of 2006.
• Average Sales Price: The average sales price for NYC walk-up apartments ($2,508,202) rose 9% over the first quarter of 2007 and 30% compared to the second quarter of 2006.
“Walk-up apartment buildings continue to be a red-hot area for real estate investors, with record level sales volume, price per square foot, and average sales price this last quarter. While the flip gains decreased this quarter, the appetite for this real estate investment class is very high.” – Ryan Slack, CEO of PropertyShark.com
Here’s the report in it’s entirety.
Not enough time to come up with anything original today. Busy trying to finally get the TrueGotham TV pilot shot (looks like it’s FINALLY happening next Friday) and of course I have to tend to my sellers who are ready to sell and buyers who still eagerly await some opening up of inventory. So here are some links over the past couple of weeks that you may find interesting:
