Our housing market is undergoing major change

Inventory has nowhere to go but up, but don’t expect a surge. Click to expand. (Source: Miller Samuel Inc.)

The word all of us have been using to describe the housing market in Manhattan is “stable.”

Well, as any prospective buyer of a well-priced apartment will tell you, much of the market has changed in a big way.  Open houses of new listings are jammed, and that is just part of the evidence.

The chief reason is inventory that is sharply down from previous years.

Respected appraiser/data hound Jonathan Miller has pulled together some astounding numbers. 

Don’t try this at home: analyzing comparables

The field-emission environmental scanning electron microscope (SEM) is a state-of-the-art instrument at the Environmental Molecular Sciences Laboratory (EMSL) that scientists use to examine aerosols and other samples. The samples can be studied using a field-emission source electron beam both in standard SEM and environmental modes of operation. (Flickr photo by EMSL)

Any seller can wish for a high price for the property about to be listed.

And any broker can guess at the right offering price.

That’s asking for trouble.

The truth is,

Why is ‘boring’ housing market’s Q3 catchword?

(Courtesy of Prudential Douglas Elliman via Curbed)

Executives of the largest brokerages and those who craft reports on Manhattan’s housing market kept using “stable” to describe the second quarter.

For the third quarter, a word I’m seeing — as you doubtless are as well — is “boring.”

The term arises from some, though not all of the statistics. I’ve also noticed an attempt at “normal.”

I’m not so sure.  Variable?  Confusing? Troubling?

Wall Street sneezed. Now what?

(Flickr photo by Mash Potato)

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?

(Flicker photo by Diego da Silva)

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.

Subscribe by Email

Share This Post

Malcolm Carter
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022

M: 347-886-0248
F: 347-438-3201

Malcolm@ServiceYouCanTrust.com
Web site

The Big Apple: CPW sale turns tidy profit. More!

She who hesitates hardly is lost

Mildred Furiya bought her townhouse in Brooklyn for $16,000 in 1966 with a cash gift from her father. Now she plans to list the dwelling for approximately $1.895 million.

A sale at that price would represent an 11,744 percent increase over 45 years — or an annual return of about 11 percent, says the New York Times.

Numbers cruncher says he’s bullish on Manhattan

Manhattan just doesn’t behave like the rest of the country

A day doesn’t go by without this question

Sleeping pills are the last thing this market needs, but some meds might prove to be useful to combat buyer and seller anxiety. (Flickr photo by Dean812)

How’s the market?

That a question I am asked daily.  I wish I had a better answer than this: It’s more or less stable, depending on the week.

Although my response seems to satisfy most questioners, it troubles me to be unable to provide a more precise take on the Manhattan housing market.  Appraisal executive Jonathan Miller has been saying for some time that the market has been “moving sideways,” and I guess that’s essentially the same thing phrased more elegantly than I do.

There are plenty of statistics, the best coming from my friend Noah Rosenblatt over at UrbanDigs.com.  He and others have documented a surge in the sales of high-priced properties, those in the millions.

But the numbers also show that

The Big Apple: Prices, sales slip in 1st quarter

Weakness emerges in Manhattan market during first quarter

Reports issued today showed price declines as much as 23 percent from the same time last year, according to the New York Times.

One of the reports, prepared by the Miller Samuel appraisal firm, had the median sale price down by 9.9 percent to $782,071. According to that document, a new index of sales that have yet to close recorded a 7.1 percent increase over the same time last year, suggesting an upswing in the current quarter.

Explanations for the dip included the artificial bump caused last year by the federal homebuyer tax credit and a boost this year in the sales of co-ops, which are generally less expensive than condos, as the result of a crimp in condo inventory.

As Noah Rosenblatt, a blogger, broker and data provider, points out on UrbanDigs.com, the figures on which the reports are based are flawed because of the way they are gathered.

Says he: “. . . you MUST understand that you are seeing an incomplete report with a ton of Q1 sales not yet publicly released! Especially March, whose sales will continue roll in over the course of the next 4-8 weeks. . .”

Price of studios suggests it’s a good time to buy one

The studio market has gone soft again–just as it did in the last recession, says the New York Times.

Prices have dipped to 2005 levels, making it possible to find studios in Manhattan in the $200,000s–lots of them. And they don’t all face a brick wall or involve a lengthy hike to the subway.

The average price for studios dropped to $404,326 in 2010 from a high of $500,479 in 2008.

A recent search of Manhattan listings on the Times real estate site and on Streeteasy.com found close to 200 studios available for $300,000 or less. An article about studios in The Times in 2009, before the market had bottomed out, found only a handful of studios in that price range.

The Times provides

The Big Apple: Nascent signs of recovery emerge

MANHATTAN BUCKS WORSENING STATEWIDE TREND OF RISING MORTGAGE DELINQUENCIES

The mortgage loan delinquency rate in Brooklyn, the Bronx and Queens in the final quarter of 2010 was up from year-earlier levels, according to a recent quarterly analysis. The uptick could well lead to a rise in foreclosure activity in coming months.

Manhattan was the only borough to see a decline in delinquencies, with a slight drop of 0.04 percentage points in the period.

APARTMENT MARKET SHOWS POSSIBLE SIGNS OF STRENGTH

Sales in the Manhattan co-op and condo market show signs of bouncing back after dropping sharply last month, reports the Wall Street Journal.

January sales were hurt because

Out and About: Our usual spring thaw is running late

(Flickr photo by wvholst)

As wintry as it is, this is the time of year when we expect the housing market to begin to warm up. When it comes to real estate, the spring thaw starts early, especially after the Super Bowl.

According to the superb data provided on my friend Noah Rosenblatt’s Web site, UrbanDigs.com, inventory in Manhattan is up from a year ago.  But sales are lower–and trending lower at this moment.

The number of actively listed apartments fell to 6,427 on Jan. 22, 2010 as opposed to 7,211 on the same date this year.  As for the volume of sales at some stage prior to closing, there were 2,056 on Jan. 22, 2010 versus 1,881 this year.

The decline in sales activity largely seems to explain

The Big Apple: Luxury sales skew market. More!

LUXURY SALES COLOR THE HOUSING MARKET, WHICH IS MOVING ‘SIDEWAYS’ AND PROMPTING CAUTIOUSLY OPTIMISTIC FORECASTS

Sales activity in the second half–as measured by number of sales, median sale prices, average number of days on market and the number of Manhattan apartments on the market–settled comfortably into historic 10-year ranges, according to two separate market reports in Crain’s New York.

(via Prudential Douglas Elliman)

Despite a busy market for trophy properties, the pace of sales and median prices of Manhattan apartments slipped during the fourth quarter, the Wall Street Journal observed.

The number of sales fell by