Boy, does time fly quickly in the summer.
First the summer ends, and with it
“The Boys of Summer” by Don Henley finishes
its annual maximum rotation (radio airplay) in August.
At least this year, the Wayfarers that you may recall from the video are back in style.
Wayfarers Have Made Their Way Back
The 80’s are back, as you look around Manhattan for fashion cues.
Has the real estate market begun looking for cues from a different time?
The stock market eagerly awaiting Obama’s speech last week about jobs.
The fact is that New York City has clawed back nearly all of the jobs lost from the 2008 recession.
The market continues to see surprising strength.
More recent news about
Bank of America
and other layoffs certainly requires us to pay attention to bank profits and
its impact on jobs here, but largely,
different buyers continue to
step into the fray, replacing many buyers who have not.
As I discussed last month, I am seeing a renewed improvement in condominium pricing relative to cooperative pricing above $1mm and below $5mm.
The condominium market continues to be an attractive place for foreign investors.
See my post on new developments for some ideas on what they are targeting.
The New Yorkers
who have tuned out much of the noise are those who I would characterize as value purchasers and immune purchasers.
Value purchasers on the lookout for one bedrooms under $500k one-bedrooms, two-bedrooms under $750k, and three-bedrooms under $1mm remain opportunistic and active.
I had written asking where all the one-bedroom buyers are, and from my conversations with other brokers and buyers, they seem to be most active at even lower levels, where the mortgages are in the $417,000 and under range.
I can’t speak to this segment in much detail right now.
But to
step back, the biggest question is:
“Are apartments selling if they are
priced right?”
Certain sellers or brokers
may appear to be savvy, but it may just boil down to correct pricing and good marketing.
No magic here.
This question may not come into play when discussing the “immune buyers,” who are out en force.
Opportunistic buyers abound here, scooping up good layouts, mostly uptown on either side of the park, in the $5-15mm range.
Good properties are selling in days and weeks, not months.
Also, there is major
demand for multi-family buildings or potential smaller development opportunities- Very little inventory to look at, other than those very overpriced or with overconfdient sellers.
In short, there is enough dealflow across the market that is keeping the RE legal profession here, and perhaps those satellite offices in slower markets, hard at work.
These buyers have been largely immune from the vagaries of the stock market and income fluxuations.
Very good for our market.
Scooped up in less than 2 weeks north of $5mm
That doesn’t mean that the market is all roses.
I expect to see lower volume for the more
pedestrian two-bedrooms and one bedrooms.
Perhaps a little lower volume overall.
Will report more on this next month when the 3rd quarter number are official.
As an aside, I’ll note that monthly maintenance costs seem to have reached some level of parity on a per square foot basis- meaning that high end building carrying charges don’t seem as expensive as they once did.
This helps the high end of the market and building mortgage refinances help cooperatives do important
capital improvements and
assist
buyers in making prudent decisions.
All in all, coops are shoring up their financial situations, good for long-term health of the market.
What will drive any pricing increases across the market?
One could be very little new development in the pipeline.
With rates staying relatively steady, supply and demand factors may provide some tailwinds to pricing improvements.
Inflationary issues may end up doing the same.
Rising tides lifting most boats, at any rate.
That and a healthy dose of foreign buyers who are snapping up what feels very cheap property to them.
The strong rental market may also buoy smaller unit purchases, eventually.
It may come down to being in this wait-and-see for many buyers until the 2012 election, but many people simply will tire of waiting and make a purchase, at a great price relative to 2005-2008.
However,
many sellers are able to sell now without losing money.
It’s an interesting time.
A few other things to note:
1)
Last weekend’s NY Times article on Apartment
combinations was
spot-on:
2) The 2nd quarter report if you missed it: Click Here
3) We’re just not seeing the floor of New listings, but my team is bringing on a few well-priced units.
I think we’ll see a more measured Autumn.
4) Per our last report, the average length of time on market is now 130 days.
This is down significantly from 2009, by about 2 months.
Also a good signal.
Have a great month! -Scott