Thursday, July 06, 2006

Early Stages of a Buyers Market in Manhattan

From CNN/Money:

Mixed messages on Manhattan home prices

Manhattan apartment prices have either stopped dead or have continued their upward trajectory. Two reports released Thursday gave conflicting reads, though both point to signs of softening.

A report by broker Prudential Douglas Elliman's showed a mean price gain from the first quarter to the second quarter of 6.6 percent, to $1.37 million. The median price gained 6.7 percent, to $880,000.

For the year, Prudential Douglas Elliman showed 5.2 percent growth in the mean and 13.5 percent growth in the median.

A second report, by The Corcoran Group, showed that the mean sales price declined 3 percent in the quarter, to $1.247 million. The median fell 3 percent to $775,000. The Corcoran Group also showed 3 percent declines for the year.

One negative trend that both parties agree on is that inventory grew: There were an average of 7,640 apartments listed for sale in the second quarter, from 6,904 the prior quarter and 4,965 a year ago, according to Prudential Douglas Elliman.

Time on the market also lengthened, to 144 days - that's six days more than the prior quarter. Corcoran found a similar trend.

"It's the early stage of a buyer's market," said Jonathan Miller, of Miller Samuel, the appraisal firm that computes the data for Prudential Douglas Elliman.
Prudential Douglas Elliman CEO, Dottie Herman, reports the Manhattan market is brimming with confident buyers - and sellers too are doing well, if they only listen to reason.

"The only things lagging," Herman says, "are properties that are not priced right. Some people got spoiled; things sold no matter what. Now it's a lot more balanced, but anything priced properly sells."

As a matter of fact buyers now often bid less than asking prices, almost unheard of during the height of the feeding frenzy. Miller says buyers negotiated a 3.5 percent discount, on average, during the quarter. "A year ago, there was no negotiating," he says.


Anonymous Anonymous said...

Gluts and Gluts of Apartments in manhattan.

All this fast WS money ain't going to support this bloated market.



7/06/2006 06:32:00 AM  
Anonymous Anonymous said...

Liten up Bubbleheads. Greedy sellers and Starving realtors.

“‘What goes up must come down,’ he said. ‘You don’t have huge expansions without a period of decline or adjustment. This is `Real Estate 101.’”

Watch the ole realtos tricks. They are still snakes like always, but now desperation is approaching while greeedy money grubbing sellers insist that they get what their neighbor got last year.




NO MAAS Grubbers!
Better save a little more for retirement. Not going to work anymore sticking it to buyers.

You buy at these prices you are a fool and deserve the financial consequences if you cannot afford the house and use some risky loan scheme.



7/06/2006 06:39:00 AM  
Anonymous Anonymous said...

nice work bob; do ya ever sleep :)

7/06/2006 07:33:00 AM  
Anonymous Anonymous said...

i strongly feel that some buyers(mostly ARMers) are going to stop waiting for prices to fall resulting in another 10-15% gain in RE values after which there will be a significant correction. The current stalemate is because a part of these ARMers are still buying houses at high prices.

Mortgage applications surge

does anyone know the breakup of the latest applications? ARMers vs investors Vs Ordinary people

7/06/2006 07:40:00 AM  
Anonymous Anonymous said...

You can bet it's worse than what two realty companies will admit. I hate gauging this market because realtors keep such a tight hold on data, and can easily spin it to look rosier than it is.

I will say that condo/co op discounting is quite a bit more significant than either of these two reports will admit. It is the early stage for sure.

7/06/2006 08:12:00 AM  
Anonymous Anonymous said...

The sucking sound you hear is
the Real Estate Agents.

Inventory, its being worked off.

7/06/2006 08:14:00 AM  
Blogger grim said...

I usually wait until Calculated Risk puts up his weekly piece on the MBAA Mortgage Application data before I post anything on it.

His graphs are great, very important in illustrating the overall trend in applications, both on the purchase and the refi side.

"The ARM share of activity increased to 29.5 percent of total applications from 29.1 percent the previous week." (Reuters)

In order to get more detailed data, one must subscribe to the MBAA Weekly Mortgage Survey. Since that costs $400 a year, you won't be getting that from me..

I've tried to get more granular data on mortgage activity in NJ. I've been quoted prices as high as $1,700 for data/surveys.

Perhaps if we got together a collection in order to subscribe to the data? Those who chip in would get access to that data privately.

We would need to get a pretty good sized group together to keep the cost down.


7/06/2006 08:25:00 AM  
Anonymous Anonymous said...

NYC doesn't have nearly as much as the glut build up as NJ.

Also, a little interesting bit about nyc that gets overlooked. There are alot of young cats in this town on mommy and daddys dime. You would be really surprized when you see young people buying an apt, you say, "how the hell can they afford it?". A good chance, parents are helping. Alot of the countrys rich have kids in nyc. Who do you think makes up most of the upper west side (uws)? It is preciously these type of kids.

You live here (uws) long enough, and work in this town long enough you will see it. I don't think you have that influence in NJ or at least not to the degree as in manhattan. No offense, but the countrys rich don't send there kids to live in Clifton or Westwood, NJ. Get my drift?
I think this does influence some areas of the market. Maybe not total, but it does influence uws. Ex. my old townhouse (not to be confused with an apt) on west 78th, I sold to a young couple 2 years ago. They put down 20%. Thats alot of jack for people under 30. But one of the kids parents was a surgeon out in LA. These parents gave the couple the 20% downpayment--cash money. The RE agent told me she sees stuff like that all the time. I bought that town house in 1978 for about 150,000. That price range was considered high back then. Amazing how much the dollar has fallen.

btw-when I say kids, I mean someone under 35. Kids of the boomer generation.


7/06/2006 08:28:00 AM  
Anonymous Anonymous said...


Thanks for mixing in some market news from Manhattan. This ex-NJ resident/potential future NJ resident, now living on the UES, appreciates it.

I qualify for what would be considered middle-class in NYC. My wife and I are committed to raising kids in the City. However, with prices what they are, any one who is not super-rich, will have a seriously difficult time accomplishing that. So, either something has to give, or Manhattan will become a playground for the Paris Hilton's of the world--and that would be a shame.

7/06/2006 08:33:00 AM  
Anonymous Anonymous said...

Saw a bumper sticker on the way to work today: "Just Say No To Debt Slavery"...wonder if that was Booyaaa Bob?

7/06/2006 08:36:00 AM  
Anonymous Anonymous said...

Well, obviously it wasn't a state worker.

7/06/2006 08:38:00 AM  
Anonymous Anonymous said...

Good little bit off the wire regarding jobs.

Grim, I forget, do they still sometimes tweak the employment numbers by counting the military as employed??


7/06/2006 08:41:00 AM  
Blogger grim said...

While the jobless numbers came in under estimates, I think that the market is more focused on the ISM Services numbers today, due out at 10 am.

The big numbers for the week are due out tomorrow.. All eyes on the payroll, especially considering the ADP numbers out yesterday pointed to a possibility of a 'blow out' number.

ECB held rates steady today, but it looks like they are set for a rate increase next month. BOJ also looks poised to move on the 14th of this month.


7/06/2006 08:47:00 AM  
Anonymous Anonymous said...

looks like a minor increase in mortgage apps meeting that one week decline in inventory

"The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended June 30 increased 5.9 percent to 561.0 from the previous week's 529.6."


7/06/2006 09:11:00 AM  
Anonymous Anonymous said...

dON`T BELIEVE IN THE MEDIA HYPE.... it`s not yet a buyers` market until we saw home prices decline by at least 30% !!!!

7/06/2006 09:44:00 AM  
Anonymous UnRealtor said...

This just in:

Appraiser Jonathan Miller said some of the [Manhattan] apartments now coming on the market are suffering from bad timing. If they had been completed over a year ago, they would have appreciated more quickly. Now, he said, higher mortgage rates have lowered demand and buyers are taking their time. "Mortgage rates were what created the frenzy, and mortgage rates are what ended the boom," Mr. Miller said.

His analysis shows that the overall inventory of listed Manhattan apartments is up more than 50% versus last year. "Sixty percent of condos in inventory right now are from new development," Mr. Miller said. The average price of condominiums, which represent the vast majority of the new housing stock entering the market, decreased between 7.4% and 17% since a year ago.

Don't these buyers and owners know that Manhattan real estate is close to Manhattan? How can property values go down, when real estate in this area only goes up?

Suzanne, your take?

7/06/2006 11:04:00 AM  
Anonymous Anonymous said...

Don't these buyers and owners know that Manhattan real estate is close to Manhattan? How can property values go down, when real estate in this area only goes up?

Suzanne, your take?

I'll be glad to handle their bankruptcy case when they cannot stretch that budget, and their little world collapses. I'll suggest they send the realtor a Thnk You note and maybe she can find them a Section 8 rental.

7/06/2006 12:38:00 PM  
Anonymous Anonymous said...

Just heard the CEO of Cochran Group, a Premier RE Agency in Manhattan on Bloomberg. She says that the #s are skewed because the real high end of the market is doing very well (ie over 5M priced condos) due to the WS bonus crowd. But the low end (which to her is anything less than 2M) is gettng hammered due to the rise in rates. So the average/median increase that the reports project are really due to the increase in prices in the high end. Go figure, a Bonus rich WSer wont mind paying another 1M on a 7M condo, since those places are unique in some way and absolutely must haves for that segment of society.
I feel that the tri-state may show average/median price increases or stabilization only because of the proliferation of real high end homes/condos in this area. But sellers of average homes would get a wrong impression of a market holding up by looking at those stable stats and will keep being in denial. Even this CEO said that a lot of sellers will need to realize that they cant get the 2005 peak prices anymore....

7/06/2006 02:20:00 PM  
Anonymous Anonymous said...

The insight from the CEO of Cochran also shows that the divide between the super rich and the rest of the crowd is increasing sharply. Few years ago someone making 200k/yr could be considered upperclass, but thats not true any longer. Now you probably have to be making 1M+ annually to even think of qualifying to be in the upperclass.

7/06/2006 02:27:00 PM  
Anonymous Anonymous said...

anon 03:27,

You are grand. You hit the nail on the head. Worded like a true genius.


7/06/2006 02:33:00 PM  
Anonymous Anonymous said...

Inventory is being pulled!

These money grubbers think next year will be better!


It will be 20% lower next year.


Panice will be in place and many stretched will be hurting bigtime.




7/06/2006 02:54:00 PM  
Anonymous Anonymous said...

Yes, and in NYC a salary of less than $100,000 for a single person is nothing.

Even northern Queens has gotten very expensive. Now most people living in Jackson Heights, Astoria & Woodside are singles making $200,000 / yr or more.

The only inexpensive parts of Queens are near Valley Stream near the Belt Parkway or near JFK.

The average one bedroom co-op is over $300,000 and requires a 20% or more down payment with a 720+ credit score.

Most buyers easily put down close to 50%, but what exactly do these people do that they have tons of cash to burn??

7/06/2006 04:19:00 PM  
Anonymous Anonymous said...

{{Few years ago someone making 200k/yr could be considered upperclass, but thats not true any longer}}

You could barely qualify to buy any apartment or Single Family home in any boro of NYC or on Long Island at $200,000 a year. It takes closer to $400,000 a year to be able to own real estate of any type around here.

7/06/2006 04:20:00 PM  
Anonymous Anonymous said...

{{btw-when I say kids, I mean someone under 35. Kids of the boomer generation.}}

You mean the 'Its all about me', and the 'gotta have it now no matter what the cost'. Or known as some of the most self absorbed, materialistic, generally intellectually dumb, and entitled group of people in the history of this country??

7/06/2006 04:42:00 PM  
Anonymous Anon E. Moose said...

"Buyer's Market" is just more Realtor hype to keep the pump primed as sales volume (read, Realtor income) plummets. If there's huge inventory to chose from, but all sellers refuse to compete on price to close the sale, that's not a buyer's market, its a cartel (something Realtor's know about from first-hand practice). Prices need to come down 10% nominal YOY, more in real terms before it will look anything like a buyer's market.

7/06/2006 05:39:00 PM  
Anonymous Anonymous said...

If you earn a steady $200k a year you can find a nice place to live within 40 miles of NYC in NJ, NY or CT. Granted that place is probably a 3 bed 2 bath with 30 year fixed, but if you live within your means you can have a nice lifestyle at this income level. You just have to forego the new cars etc.

$200k puts you easily into the top 1% of all earners in USA, even if cost of living in NY area makes it worth less than $200k in Michigan.

7/06/2006 05:46:00 PM  
Anonymous Anonymous said...

{{$200k puts you easily into the top 1% of all earners in USA, even if cost of living in NY area makes it worth less than $200k in Michigan.}}

It is average at best in the NYC area whether you are living in 'the other 4 boros', Long Island, Hudson or Bergen County. Unless you are living in a below market rent stabilized apartment or have lived in the same house for 30 years, then you are still living paycheck to paycheck.

If you look at the rest of report, you will also see that rents are soaring as well. In Manhattan, the average rent is up 15% to $3,970 a month and in the 'other 4 boros' & Long Island, the mean rent is over $2,000 a month.

You have to go far out into Suffolk county, or in Southeastern Queens near Cambria Heights or Rosedale to find something affordable to rent that someone making between $50,000 - $75,000 could afford and qualify for in todays market..

7/06/2006 06:47:00 PM  
Blogger chicagofinance said...

Please give me a break!

7/06/2006 09:21:00 PM  
Blogger RichInNorthNJ said...


So are you saying you'll NEVER be able to afford to live in Northern New Jersey?


Maybe you could move to the Carolinas?
Real soon.

7/06/2006 10:23:00 PM  
Anonymous Anonymous said...

Would anyone claiming that the average Manhattanites, Brooklynites or any NYC ites earn giant salaries step up with the data?? I think that figure is waaaaay off.

Here are some demographics from the census thru 2000 --

Money and Housing
Some of the most stunning results concern money and housing. In the United States as a whole, median household income increased, while poverty declined slightly. Like most cities in a band beginning in Rhode Island and Connecticut and stretching down to Washington, DC, median income (the income earned by the household in the middle of income distribution) fell in New York City during the 1990s. In New York City it declined from $38,706 to $38,293. (All these figures are adjusted for inflation.) Information on what sort of families and households garnered higher income, and what sort garnered lower income is not yet available. For New York City, the results show that only Manhattan registered strong gains, with an increase from $41,872 to $47,050. All the other boroughs suffered declines. Those in poverty increased in New York City, also bucking a general national trend. However, when one examines those at the higher income brackets one finds that the rich did get richer in the 1990s. Those in Manhattan in the top 20 percent of the income distribution made at least $95,000 in 1990; now they make at least $119,000.

7/07/2006 08:28:00 AM  

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