We have been waiting to see our end of 2013 data, as compiled by BHS’s chief economist, Greg Heym, before sending our first newsletter of the year.
Sorry for the delay!
And Happy New Year!
This data includes/offers the latest
On the heels of the State of the Union, the state of the market here in NYC remains quite strong:
- Inventory is down 21% year over year, with only 3751 listings (1807 condos, 1944 co-ops)
- Inventory is down markedly in Upper Manhattan, including Harlem and North.
Harlem inventory is down 52%
- Inventory is at three-month levels, which is generally unheard of, across all of Manhattan
- Coops are selling slightly faster than condominiums, in the broadest of contexts
Take a peek at the report, please.
Anecdotally, I can tell you a bit about the Upper West Side and Upper East Side bidding wars:
1) 2-bedroom with River Views along Riverside Drive will sell over $1.9mm – the last sale was $150-200k lower
2) 3-bedroom in a nondescript building
on West 93rd with no views in a non-doorman building, needing $200-300k of work, went in a bidding war over $1.8mm
3) 5-room apartment on West 92nd street with light and city views went in a bidding war over $1.8mm
4) 8-room apartment on Park Avenue in the 80’s in mint condition that would have sold in 2009 for $6mm will trade close to $8mm now with multiple bids
5) One Riverside Park, at $2000 per square foot or more, is 50% sold in less than 4 months on the market.
The sales director is complaining that if the building sells out too quickly, she will not have another project to move to.
To fill in the picture – what the report doesn’t touch on is a comparison with 2007, the year when last overall peak pricing happened.
Certainly condo sales have surpassed that peak, generally, and cooperative sales have, as well – with the exception of some one- and two-bedroom categories across the city.
Further, there will be “asterisks” in the closing data over this quarter and next, with many of
the closings taking place at 157 West 57th street, downtown at Walker Tower, and other through-the-roof developments.
The $50 penthouse sale at Walker Tower is an outlier, not the norm at the moment.
But we’re seeing that, almost across the board, we are back to the peak and well above in many, many cases.
Is it any surprise, though, given the extremely strong sales data, that sellers have become incredibly aggressive with pricing?
What we are seeing right now is the age-old struggle of a sellers’ market.
Get in the ring!
As higher closing numbers have pushed
through, sellers have begun to price properties too high.
We are already seeing many properties sit on the market.
Especially at very high end, where pricing may be most difficult, we are seeing fewer properties selling overall.
Think of the $100mm unit at the Cityspire, which never sold.
In the 4th Quarter 2012, we saw 9 units sell at over $20mm.
4th quarter of 2013 we saw zero.
While we may see this take a little longer to play out, units will linger if they are not priced appropriately.
Buyers are as savvy as ever, and despite demand and less inventory, it’s not true that “any price” will sell an apartment.
The disclaimer is that sought-after views, layouts, finished units, and larger apartments are setting new records, and historically sought-after buildings tend to sell more quickly in this market – and we are seeing lots of bidding wars to that effect.
It is the one- and two-bedrooms which certainly will take longer to sell if not properly priced, as will very large properties at the high end.
Unfortunately, not every condo can trade at $2000 per square foot yet.
A very well-respected broker in Manhattan and I were visiting today at a lovely Riverside Drive listing.
She was complaining that this type of market is exhausting due to overaggressive sellers and brokers.
Sellers are angry when they get 10% over the last sale price, instead of 15%.
Competing brokers are angry their buyers didn’t win bidding wars.
And so sellers wonder why I might warn against irrational pricing by sellers.
Still, overprice at your peril and get a great broker to represent you.
On the buyer side, I find that in this market, our value to buyers is both in helping them be aggressive where needed and ensuring that they do not overpay for the wrong property.
The Fed seems to be giving guidance that rates may stay steadier over the coming year or even longer.
Mortgage brokers are telling me to expect slight upticks, but nothing that will upset the apple cart.
I’ll wait until February to cover the full scope of 2013 for my firm, which may show as many or more sales than 2012 – seemingly incredible given the reduced inventory.
But considering the fraction of new development condominium relative to 2004-2008, the pace of sales only can slow down in 2014.
Trading up or down seems nearly impossible for most.
I continue to struggle to see what will carry us out of this low-inventory environment, given the dearth of new construction compared to our last boom of 2004-2008.
Most construction seems to be permits, apart from the $4500 per square foot inventory that will come online along 57th street and Central Park South.
So, the weather does not seem to be cooling the property market to any large degree (pun intended).
Let’s hope that some listings find their way to market out of the deep freeze.
In the meantime, enjoy our ice-cold winter!