I’ve been selling residential real estate for 35 years, and for the first time I hosted a business talk last week in my Living Room with a guest banker and an attorney. I had a script and an agenda, but we were an intimate group, and the setting was informal, so as I touched on the stats that impact the market, I encouraged Q & A from the buyers and sellers who had gathered. To set the stage for discussing whether now is the time to buy or sell, I offered an overview of current inventory, identified 3 distinct market segments, highlighted the rise of the condo product, and considered absorption rates.
No matter where we are in the cycle of real estate’s ups and downs, it’s appropriate to consider where we’ve been, evaluate where we are and think about where we are going. This year nearly every industry event I attended focused on the market’s upper end, a subject that has captured the most press recently. Last week’s Annual NYC Real Estate Showcase + Forum hosted by The Real Deal opened with the question “What’s Ahead For Luxury?”
Our residential marketplace set new highs in 2Q2015. Reports from real estate brokerages are trumpeting similar though slightly differing stats, and news agencies have been buzzing with the story because everyone loves to talk and read about real estate. Record levels have been achieved in both average and median sales prices, inventory though up initially last quarter is still stalled at about 20% below the 10 year average—especially for properties under $2M, and trading volume is down.
It’s not smart for buyers to be unrepresented in today’s marketplace. The inventory is too thin, and the stakes are too high. In a climate where well priced properties are attracting multiple offers and selling quickly, it’s important for both sides of the transaction to be represented separately by experienced agents. Dual agency, though recognized by NY State, is problematic. Experienced brokers widely acknowledge that when each side has its own representation, the likelihood is greater that the deal will proceed more smoothly and with fewer hiccups to a successful close. There are compelling reasons for buyers to collaborate with a professional agent.
November 24, 2013. The year 2013 is sure to go down in the annals of NYC real estateas a stellar time. What were some of the dominant trends? Let’s take a look.
(1) Housing stock shrinks further.An overriding and ongoing lack of inventory defines the 2013 market. All analytics point to the lowest level of supply in more than a decade. The shortage has heightened competition among buyers and driven up price levels. Demand has remained consistently strong and is expected to be sustained.
There’s plenty of data available to support a U.S. housing recovery even in areas that were hardest hit by the downturn like Miami and Phoenix. New residential construction is on the rise nearly everywhere, and home builders like Toll Brothers, DR Horton and Lennar have been posting significant gains monthly since October 2011. While the housing market indeed is improving across the nation, New York City continues to dazzle as it attracts not only foreign buyers who have found safe haven for sovereign money, but the brightest and the best who make NYC their home.
There’s a palpable boom at the top of the new development market as a growing supply of high end products sizzles with through-the-roof pricing. At the same time, price conscious home buyers are choosing from a shrinking inventory of resale properties. Both phenomena are reasons for optimism.
We’re at an interesting moment of time in the current residential marketplace. On the one hand, an already thinning inventory of apartments has been shrinking steadily since the second quarter of this year. According to analytics provided by Noah Rosenblatt’s www.urbandigs.com, as of this writing, a total of 5,659 apartments are on the market in Manhattan—the lowest number in more than four years. At the same time, there are 3,012 pending sales—just 189 deals short of the highest number of signed contracts achieved during this same period on June 14th of this year. Properties in all price ranges are being absorbed at a faster rate than new properties are coming to market. With supply dwindling and demand rising, sellers who price realistically have the edge today.
Five years ago on 4/30/07, I wrote a column about Best and Final offers. The real estate market was at its peak, and competitive bidding was commonplace in all price ranges and categories. Discretionary Wall Street bonus money jingled with frothy cash payments, interest rates hovered at 6%, buyer demand was high, and quality inventory was tight. Open houses were crowded with as many as 30 people showing up in an hour, and activity was brisk. Apartments were not staying on the market very long, often trading 10-15% above asking prices.
We're poised in these last months of 2010 to finish the year with an improved 4th quarter. After a tumultuous 2009, our market rose slightly and hesitantly as 2010 began, picking up unexpected steam steadily through April, May and June, but then slowing and falling flat through much of the summer. Following on the heels of Labor Day, market activity resumed, and the mood is upbeat again. As of this writing on a crisp October 3rd morning, the possibilities loom that the spring momentum can be repeated in the next eight weeks before Thanksgiving.
We're poised in these last months of 2010 to finish the year with an improved 4th quarter. After a tumultuous 2009, our market rose slightly and hesitantly as 2010 began, picking up unexpected steam steadily through April, May and June, but then slowing and falling flat through much of the summer. Following on the heels of Labor Day, market activity resumed, and the mood is upbeat again. As of this writing on a crisp October 3rd morning, the possibilities loom that the spring momentum can be repeated in the next eight weeks before Thanksgiving.
Remember the game “52 Pickup”? It’s the “trick” played by a practical jokester on an unsuspecting victim who must pick up 52 cards that have been scattered willy-nilly on the floor. “That’s what the board packages we get look like sometimes—especially from the larger firms where there seems to be less supervision,” says Jane Bayard, Warburg’s Executive Vice President. She’s describing how sometimes what we get from our co-brokers makes no sense. “It looks like the papers have been literally dropped on the floor, then picked up totally out of order and reassembled haphazardly with no thought to logical sequencing of information and with numbers that just don’t match up.”
Renovating an apartment in Manhattan presents a set of unique challenges. I’ve written on the subject before, and with the perspective of my recent 6th renovation behind me, I offer some advice to the uninitiated.
First Do Your Homework
Talk to as many people as you can who have been through the process. Get recommendations, ask questions and take notes. Interview your primary professionals carefully, visit their past projects, and check references. When evaluating bids, take into account reputation and experience as much as you consider price. Determine whether projects were finished on schedule. When checking references, ask how each trade handled problems that surfaced during and especially after the job. The lowest bidder may not be the wisest choice.
In late June, Fred Peters wrote in the Warburg Blog about how real estate brokerage has changed since 1980 when he first got started in the business. I began as a broker in the same year, and Fred’s musings got me thinking about how remarkably different our business was then, and how it has evolved.
“Birds do it, bees do it, even educated fleas do it…” I’m talking about negotiating, not falling in love. Everyone does it, and we do it all the time—with our partners, our children, our friends, our bosses, our clients, and even with ourselves. Some do it more skillfully than others.
Volumes have been written on the subject, and master classes continue to be offered on negotiating skills and principles. Recently I was reminded of an excellent REBNY NYRS course taught by Dr. Alon Ben-Meir who insisted that brokers consider themselves “not merely as a messenger conveying information from one party to the other, but as an architect with a clear vision of the structure he or she wants to create.”
Recently I was hired by the executors of an estate to sell an apartment in a ground lease building on the Upper East Side. We’ve cleaned and staged the property, but as of this writing, we’ve chosen to wait before putting the unit on the market because there is too much uncertainty surrounding the renewal of the lease which expires June 30, 2010. I’ve been in this business since 1980, have sold in several landlease buildings in the past, but I’ve never heard of an instance where the co-op board and landlord waited until the 11th hour before coming to terms on a leasehold extension.
In today’s Internet Age, real estate buyers and sellers need only to turn on their computers to surf the proliferating public websites for immediate access to all kinds of information. With the click of a mouse, they can check out available inventory, view floor plans and photos, gain data about recorded sale prices and even join discussion boards and blogs. When the Internet provides such easy access to information, why hire a broker? And how does one choose from among the growing number of real estate professionals? What makes a good broker?
Last February, our market was reeling from the aftershocks caused by a stunning chain of events that began with the collapse of Bear Stearns and bankruptcy of Lehman Brothers. The subsequent downturn in Manhattan's residential market was sudden and precipitous. Sales activity nearly halted and then grew tentative as buyers waited for successive shoes to drop. Whatever limited transactions occurred came with steep discounts averaging 25-30 percent off the highs. Fast forward more than a year, and there are real signs that our marketplace is on the comeback.
It’s tough to be writing on a hazy, hot and humid day in the last week in August for an October publication date. By Fall, an unusually damp summer will have morphed into cooler, drier crisp autumnal air. If we’re lucky, we’ll experience an Indian summer, and soggy greens will explode into vibrant foliage of reds and oranges. Though I’m not in the business of forecasting weather or market trends, I do declare I’m optimistic about residential real estate for the last quarter of 2009. But I also have some worries.
I’ve been a skeptic, and I’ve had my reservations, as I rationalized: Who has the time to learn about social networking and how to use it? Besides, my private life is—well, private. Being discreet is a requisite of my business, and I likened social websites to reality TV, arguing neither was my cup of tea. Though not a full convert yet, I’ve made an extra special effort to begin. Hardly a passing fad, social networking is spreading to include users on both sides of 50. As baby boomers join their children in ever-growing interactive online communities, the way people work and play together is being transformed. As the various social websites proliferate—each with its own distinct personality—marketing on these sites is evolving, underscoring an increasing interconnectivity between social and business worlds. What’s a broker to do?
