High End Felling the Pain

Happy New Year to all. Here's hoping for a better 2009! While many feel as though we are in for more of the same, I like to think that as all of the liquidity that has been injected to the economy over the last couple of months finally kicks in, things will start to improve. Also, a new administration should be a plus as well. On the other hand though, Manhattan real estate still will be in for more pain. The New York City economy will continue to contract as the lack of Wall Street bonuses starts to take hold. Restaurants will go out of business, commercial vacancies will increase, and new condos will go unsold. Hey, we all enjoyed life while the bubble inflated...well now we will have to deal with some pain as the air gets let out. We didn't creat this mess overnight, and we will not get out of it overnight either.

My wife and I are enjoying some R&R in the Carribean, and the condo complex where we stay has more units on the market than either one of us can ever remember. One owner who bought his condo in 2008 is all ready trying to sell and he also has his home in CT on the market as well. His stock portfolio is down 40%, he is leveraged, and he is seeing the last 40 years of his hard work go down the tubes. Unfortunately, he is not an isolated case. So while New York City is down 20% from Q4 of 2007, there may be more pain ahead for Manhattan real estate. Great opportunity for first time home buyers who have down payment cash that they kept ut of the stock market....not such a good time to be one who needs to sell.

The Optimism Index

From New York Magazine. Though the New York City coop market should hold up better than the condo market, tThis sounds a bit optimistic to me....


The Optimism Index, Part II

Two weeks ago, we called upon Streeteasy.com’s data team to gauge whether condo sellers were growing less hopeful. That is, we plotted asking (as opposed to selling) prices in 2008 against those in 2007. The results were informative enough that we’re back with more—this time about co-ops, which tend to be a little less volatile than condos because their boards are stricter.
And what do we see? Co-ops’ asking prices are down slightly, too, but the drops are generally a little smaller than among condos. The only marked decrease is in Upper Manhattan, where asking prices fell 6.31 percent. (Note that the average price there is lower, so it takes much less of a dip to create a big percentage swing.) In traditionally high-demand downtown areas, the prices are even up a bit, by 1.36 percent.









As to optimism: We’ll know more when we can compare these asking prices with actual post-meltdown sales, which should begin to become evident around the end of the year.
Data provided by Streeteasy.com.

Great article about New York Real Estate from 1968

Google has now made it possible to look at every single New York Magazine ever published. In an issue from 1968 there is an article about New York City real estate, what is takes to get into a coop on 5th Avenue, and the price of an apt on West End Avenue. A must read for anybody who has ever lived in New York.

New York Magazine Article from 1968

Fed Speak

The Federal Reserve's Beige Book just came out, and low and behold, they realize that New York City is slowing down.....read The Fed's comments below.

Construction and Real Estate Housing markets in the District have deteriorated further since the last report. A major residential appraisal firm reports substantial deterioration in New York City's housing market over the past two months: prices of Manhattan co-ops and condos are reported to have fallen by 15 to 20 percent since mid-summer, though it is hard to get a clear handle on prices due to thin volume--much of the recent activity is reportedly from desperate sellers. Transaction activity has dropped off noticeably, and there has been a large increase in the number of listings. Some buyers that had signed contracts for units under construction earlier this year are having trouble getting financing at the contract price now that market values have dropped. Many of those having difficulty selling their apartments are putting them up for rent, boosting the number of rental listings substantially--particularly in doorman buildings. Average asking rents are reported to be down 1 to 4 percent from a year earlier.

Inventory Rises, if Not Sales

NYTimes published a piece last week that tells us what we all ready know. Inventory is up, and sales are down. Eventually, prices for apartments in New York city will begin to fall as owners need to sell for one reason or another. This does not mean the sky will fall, it just means that, despite what we have heard for all these years...New York real estate is not immune.....



By JOSH BARBANEL

Published: November 23, 2008
ALTHOUGH the prices of Manhattan apartments have remained high so far in the fourth quarter, figures on inventory and new listings illustrate a sharp deterioration in the market as the economy and consumer confidence fell.

The number of apartments that went into contract or had accepted offers in October plunged by 20 percent compared with September, and by 62 percent compared with October 2007, according to figures provided by the Corcoran Group, a residential real estate firm.
There were 577 listings with signed contracts or accepted offers this October, compared with 1,588 a year earlier, according to the data.At the same time, the number of Manhattan listings rose to the highest level in several years, up 20 percent since August and 33 percent since October 2007, according to figures provided by Jonathan Miller, the president of Miller Samuel, an appraisal firm that prepares market studies for another brokerage firm, Prudential Douglas Elliman.
Mr. Miller said that because of the lag between contract signings and apartment closings, typically as much as 45 days, he didn’t think sales figures would reflect the price decline in the market until the first quarter of next year.
A look at closing prices so far in the fourth quarter showed that average sale prices remained flat though well above the level of a year ago, with a decline in co-op prices offset by rising prices on condominiums.
During the last few years, the upper end of the market was strong, and sellers often stuck to their prices. But Mr. Miller said that he expected this pattern to change, and owners of more expensive apartments to give large discounts off the original asking prices.
“The market is redefining itself,” said Kirk Henckels, the director of private brokerage at Stribling & Associates. “Once we find a consensus — and we are close to it — asking prices will fall.”