To make writing, or speaking interesting, every book/teacher/article encourages you to tell stories.
Stories bring your information points to life.
And yet there’s the tricky bit about keeping my client information confidential, and how to tell fun stories without giving anything away.
As I tend to work best with deadlines looming, I keep this entry to the end of my monthly blogging.
Isn’t it also nice to have the market snapshot as up-to-date as possible?
So, Scott, how is the market?
The market is as segmented as it has been in some time.
If you are a two-bedroom or three-bedroom buyer, there is incredibly low inventory across the city.
The East Side, from the 20’s up to the Upper East Side, has more inventory.
Further, the competition in prime areas on both sides of the market has made for an interesting Spring.
Let’s focus on the 2-3 bedroom market for now.
The high end of the market is roaring.
Sales at the Laureate, my company’s newest high-end condominium, are brisk to say the least.
The numbers they are getting (easily north of $2000/sf) are being achieved up and down the building.
With fewer than 70 apartments in the building, nearly all larger than 2 bedrooms, this is going to prove to be one of the most successful projects of the year, if not the most successful.
I must admit I was very skeptical when I first saw the presentation, that the numbers would be hard to achieve.
Watching these contracts get signed has been a signal that buyers of larger apartments are not afraid to commit.
I believe it comes down to a longer-term play, combined with cheap money.
That, and a well-constructed building will get people there.
Other BHS projects, downtown and elsewhere- if well done- are selling well.
HL23, a building that has been incredibly well-received by critics across the country, is continuing to put West Chelsea (23rd and 10th avenue) on the map.
The full-floor apartments and views make this a great opportunity, often at prices that are very competitive with far inferior product.
We are talking about $5-6mm per unit to start.
On 5th avenue and Central Park West, the view apartments are selling briskly.
Lovely 76th and Broadway Condominium
We’ll come down from the stratosphere, though, and focus on an intense area of the market- the buyers who are hunkering down in Manhattan, who are craving great location, larger space, decent amenities, and reasonable carrying charges.
Fair Housing laws make this group harder to market to directly, since we are not allowed to call apartments “Great for Families,”
near a specific school, etc- But these buyers are out in force.
If one can borrow at under 4% for an interest-only product (hard to find in the Jumbo area north of $729k) and under 5% for 30-yr fixed product, it makes for a good time to purchase.
Dealmaking simply becomes a factor of injecting reality into each situation.
The Reality:
1) Some
buyers who are qualified are feeling a bit overconfident in their prospects.
For example, a
qualified, all-cash customer has lost out on at least two properties because she came in too low on her offers.
Other buyers are realizing that they need to come in at realistic numbers.
She is finally understanding that an all cash deal is great, but it is
hardly better than a
qualified buyer without a mortgage contingency.
I am working very hard to keep buyers realistic- the longer the inventory stays low, the easier this will be.
Vanderbilt Appraisal came out with a recent inventory report, which shows that downtown there is well under what is considered a “healthy” amount of inventory.
I have buyers who simply cannot find a decent 1 bedroom with an office in Tribeca under $1.5mm.
Forget about 2-bedrooms.
We’ll see if/when inventory comes back.
2)
The properties that are well located, well-priced, and renovated (enough) are seeing multiple bids, often over the asking price.
I’ll give away a story that
may appear in the New York Times soon.
An Upper West Side property that will close very soon ended up selling in an all cash deal at the asking price.
In the Winter, my clients and I sat down and discussed prospects.
I told them where I thought the property would sell, and we then ironed out where we would bring to market.
Lo and behold, we had forty (40) people at the first open house, with a strong deal on the table after 2 weeks, when the buyer who ended up getting the apartment walked in.
These situations can be frustrating for buyers who just want a home and are qualified to buy it.
Inventory is low to the point where the “need” buyers will pay what is necessary, edging out the buyers who for one reason or another have a less rosy outlook on the market.
When we finally break the bad news to these other buyers, there is shock and dismay and frustration- they wonder how someone could pay these numbers.
However, I think that we’ll look back on these times in five years and realize just how low the market was in late 2009 early 2010 and the deals that were there.
We are past the bottom now for 2+ bedrooms.
3) The junk is still sitting.
It’s not that people are buying anything- the apartments that need work often are sitting (sometimes not) and if it’s overpriced, buyers will wait or bid very low.
The lesson?
Come out of the gate well-priced or underpriced, and let the market decide how much the property is worth.
4) The hottest part of the market are 2-bedrooms under $1mm and 3-bedrooms – there’s not a single three-bedroom under $1.25mm on the West Side that doesn’t have multiple bids.
It’s shocking.
I’m exaggerating, but not by much.
Onto the other segment of the market in which I do have business- the One Bedrooms.
On the East Side, there is more inventory than anywhere else.
It is simply taking longer to sell these.
2005 pricing is very common.
If you are priced higher than these numbers, your property may sit.
But even if you have a well-priced property, a one-bedroom is taking longer to sell- the buyers out there right now are looking at everything, and their confidence is much better founded in reality than the buyer I mentioned above.
I have one-bedroom buyers who have a view of what an apartment is worth in this market- and they are getting much closer than one might think.
It’s not a seller’s market for a one-bedroom.
Well-priced units are selling, but only at the right price and in the right location.
One can feel the frustration building a little bit with sellers.
I have sellers who will opt to take apartments off the market rather than sell at too large a loss- and since there seems to be a gap between the sales price of the 1-bedrooms, and the demand (and therefore price) of the 2-bedrooms, circumstances must line up for buyers and sellers to come together.
Otherwise, patience, grasshoppers.
I’m not painting a great picture, and I’m sorry.
The last thing that I’ll leave you with is that there is still great optimism in Manhattan.
Buyers are feeling good about jobs, and our economy here is getting better.
We will see how it plays out.
I believe the one-bedrooms will start selling in the summer, when all the 2-3 bedrooms buyers hit the beach.