Maybe you’ve seen the latest news about Manhattan prices.
One report says Manhattan apartment prices grew in the second quarter; another says they fell.
|Prudential Douglas Elliman||Corcoran Group|
|Mean||$1.4 million||$1.2 million|
|Change||Up 6.6%||Down 3%|
|Change||Up 6.7%||Down 3%|
The 2 largest firms in Manhattan real estate have released 2nd quarter numbers that prove once again that more cooperation is greatly needed among the firms. As is, these numbers only add to the confusion of just what is happening in the Manhattan marketplace. We are talking about HUGE discrepancies here.
What is going on with these numbers and how is it possible that these two goliaths of Manhattan real estate can have such differing data? Main reason… no multiple listing service. Each company is compiling these reports based on their own proprietary data paired with additional data provided by two separate appraisal companies. The data is only as accurate as the agents who "update" it.
So what is going on with the Manhattan real estate market? It’s quiet. Buyers in many price points have much more inventory (both companies concurred here) to choose from and they are taking their time deciding which place they will call "home." It is a much more normal real estate market and I believe, more healthy for everyone involved. That said, with media reports like these, it’s no wonder that buyers and sellers are having more difficulty reaching a meeting of the minds than we’ve seen at any other point in the last decade.
Many sellers will choose only to read Prudential Douglas Elliman’s data and stand firm on their prices (very bad idea) and buyers will only read Corcoran’s numbers and will somehow determine that a 3% decline actually translates to 30%. It all adds up to continued frustration for all involved. By the way, the "days on the market" numbers are laughable as they are based on the time a home has been on the market at its current price (a home that may have been asking $2M last summer, but experienced three price drops, finally hitting $1.65M one month ago at which time it went to contract, would be reported as being on the market for approximately 30 days… a bit misleading right?)
Here’s What I See Happening in the Marketplace
Prices are flat to down depending on market. Third quarter numbers, I anticipate, will show prices that are down from highs of Spring 2005 (the peak). If third quarter numbers don’t show that, I will have an entirely new series of questions.
Sellers need to accept that they will be selling for as much as 20% less than their neighbors did last spring, and buyers need to understand that most in my industry understand this and have priced current inventory appropriately, so bidding 20% under ask is going to be met with silence from most sellers. The unrealistic seller will follow the market down as interest rate increases continue to thin the buying pool. The unrealistic buyer will find themselves giving up a minor reduction in current asking price and getting higher interest rates and a monthly payment that may be greater than if they had jumped into the market sooner.