Few of you would disagree with the thought that the gyrations on Wall Street cannot be a good thing for the housing market in Manhattan.
After all, it is axiomatic that our market catches a cold when Wall Street sneezes. And Wall Street suffered much worse than a fit of sneezing. It briefly went into intensive care and, unfortunately, could be rushed there again.
I didn’t need the latest consumer confidence level, the latest statistics in the listing database or the following e-mail on Saturday from buyers with whom I have been working to know that the impact on Manhattan’s housing market has to be severe:
[We] have been discussing our outlook for NYC and we have come to the conclusion that we do not think that we want to spend approximately $500,000 for a 1/2 bath or 2nd bath. We think that for a savings of $500,000, we can manage with 1 bathroom. . .
This economy has made us more conservative. I thank you in advance for your understanding.
Indeed, how could I not understand, as I wrote in my response?
I don’t see how the housing market can fail to freeze.
Consumer confidence plunged in early August, as the Wall Street Journal noted. The Thomson Reuters/University of Michigan index for early August recorded a startling drop to 54.9 from 63.7 at the end of July and 63.8 in early July.
That is not a good, though unsurprising, sign of things to come.
The preliminary August current conditions index fell to 69.3 from 75.8 in late July, the Journal reported. The expectations index plummeted to 45.7 from 56.0.
Because it is August and little is happening anyway, I view with a grain of salt the numbers in the OLR (OnLine Residential) database. But they may be worth a gander.
Compared with the month ended July 17, the time since then has registered what I take to be an insignificant 1.74 percent decline in the median listed price, to $811,400. At the same time, the (lagging) number of signed contracts fell 6.14 percent, to 76.
To me, the most revealing statistic for this admittedly crude analysis is the number of listings with price cuts. They actually plummeted by 220 to 969, an 18.5 percent change over the month.
Not so alarming, you might conclude. But. . . but. . . fully 170 of the 220 — that is, 77 percent — of the reductions over that period occurred in the last seven days!
If you have the stomach for more numbers, consider, too, August’s angst compared with the especially accurate statistics that Noah Rosenblatt of UrbanDigs compiled for July. He notes that only 1,168 new listings came on the market in July, the 10th consecutive monthly decline in new supply from the previous year.
Moreover, he finds a mere 713 contracts signed that month, down from 988 in June and also down from 760 one year earlier.
At the same time, pending sales — those at some stage after having gone to contract and before closing — have continued a steep downward trend that began in June. They are down 8.7 percent as of now, though seasonal decreases are normal.
Seasonal or not, I’m wondering whether this won’t be the fall and winter of our discontent.
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022