Maya Roney’s piece entitled Americans Afraid to Buy Homes that she wrote for BusinessWeek Online is a prime example of why there is NO "National Housing Market" but also why those "national housing stats" are having a psychological effect on some Manhattan buyers.
This morning, the NAR said existing-home sales “remained essentially unchanged” in May as they slipped 0.3% to an annual rate of 5.99 million units. Sales jumped 5.8% in the Northeast and 0.7% in the Midwest, so it looks like the West (down 0.8%) and the South (down 3.4%) are the biggest losers.
NAR senior economist Lawrence Yun said “psychological factors” are currently the biggest drag on housing, with tighter credit for subprime borrowers coming in a close second. Rather than take the plunge into this uncertain market, “many people are doubling-up—they’re adding roommates or moving in with parents,” he said. Yikes!
So what exactly are those "psychological factors" that Yun is speaking of? Well, anecdotally (I have become accustomed to making the "anecdotal" disclaimer) I’m seeing buyers who are indeed afraid to "overpay" for real estate despite the signs that the local New York City real estate market remains strong. Many are ignoring comparable sales and listening mainly to national housing news that kicks up their anxiety to a level equal that of Alvy Singer in Annie Hall.
Just today I was out with a client who could be considered a "picky" buyer except for the fact that he really isn’t requesting all that much considering he will spend up to $4 million! He wants 2000 or more square feet with light and views for $4M or less. After viewing 2 properties both in the newer Trump Place buildings on Riverside Boulevard, he became increasingly discouraged at the inefficiency of the Manhattan market and specifically the random asking prices that seem to be pulled from space.
You see, 2 weeks ago we viewed this client’s perfect home asking $3.995M only to be told after our second visit that the apartment was now asking $4.25M. We submitted an offer based on the "original" ask of $3.995M only to be told that the seller wouldn’t accept less than $4.2M. That apartment sits on the market and I suspect will for quite some time. Back to the Trump Place units we viewed today. Both are asking roughly $1900/sf. The one with the terrace overlooking the river has multiple offers and the other unit is a would be combo of 2 units that would require at least another $250K in renovations. Obviously the terrace is a draw for buyers unlike the prospect of combining 2 units. So why the same price per sf? No clue.
So I continue my search with this buyer who is being bombarded with scary "national housing" news that has very little to do with what is happening locally. Except for the fact that he’s listening and the fear is nearly paralyzing. That combined with some sellers (fewer than before) who are still trying to eek out a bit more than the market will bear makes for a frustrating buyer’s market. At least in the $4M range. By the way, the same is true for two of my buyer’s in the $10M range. Anyone feeling sad yet…didn’t think so.