The entire Deanna Kory Team sincerely hopes that you, your family and friends are in good health and staying safe. It is now more than a month since our great City has shut down and for many of us, the sudden shift overtook every aspect of our lives. As one of the epicenters in the U.S., we New Yorkers have been especially affected. That said, New Yorkers are perhaps some of the most resilient people on earth and no doubt we will work hard to rebuild our lives in the city we are proud to call home.
Some weeks ago, New York State declared that the work of real estate agents is essential only when “legally necessary” and, as such, only virtual showings are allowed. However, as of mid-March most New York City’s residential buildings closed to non-residents, so for the most part all showings stopped. This shutdown will continue until the City reopens and buildings allow us to enter apartments and homes once again.
Many people who own or wish to buy a home are wondering where the market is now and what the future holds. There is currently limited data, but we have culled the information that may help you understand what is happening in the Manhattan real estate market and have provided answers to questions which we have been asked on a regular basis, by both buyers and sellers.
- Was the market getting stronger before the shutdown? Yes, it was improving. In the Fourth Quarter 2019, contracts signed rose for the second consecutive quarter for the first time since 2015. November and December were particularly strong with December contracts up nearly 15% from the previous year. Volume of contracts signed continued to increase in early 2020: by mid-March closings and contracts signed were up 10% versus the same period in 2019. Lower pricing, record-low mortgage rates and what was a strong economy helped unlock pent-up demand.
- Have contracts been signed since mid-March? Yes, some contracts are being signed, in total 260 since March 23rd in all of Manhattan. But sales volume is down between 74-100% depending on the price point, size and location. Note: So far, nearly all contracts that have been signed were on properties which buyers had visited prior to the shutdown. See chart below.
- Are people buying properties without visiting them? In resales, the number of contracts signed by people who did not personally visit the apartment is quite low. However, in new development sales (where many people buy based on viewing plans and images in normal times), the numbers vary from 10-20% of the sales per Corcoran Sunshine. Please note that the contracts for new development have been signed since mid-March, have primarily been below $4M.
- What is happening to prices? What about the future? So far it is hard to tell. Recent closings help determine the most current pricing. At the start of the shutdown, very few closings transpired as it took some time to figure out how to manage a virtual closing. Now that some closings are occurring, they are showing on average – a minimal decline in prices. Appraisers and experts predict a 3-5% decline in lower end sales and 5-10% decline in the higher end.
- What types of properties are going into contract now? The majority of apartments going into contract are below $2.5M.
- What about closings? As stated above, closings are in fact taking place, some with great difficulty. Condo closings tend to be easier. Issues include: buyers do not want to close if they cannot move into the apartment, co-op closings are very hard to complete because they require the managing agent at the closing and some banks are unwilling to perform a virtual closing.
- Are people renegotiating prices? So far, our research has shown that some buyers are renegotiating prices prior to closing. Those who are not renegotiating often believe that if they plan to own the apartment for at least 5-7 years, anything lost will be made up. There are others who need to sell their current home and feel that they must make up their loss by renegotiating their purchase price or are requiring more time to close.
- What do you think the future holds? While it is anyone’s guess, I am hearing both positive and negative sentiments. It is much easier to deal with absolutes rather than the uncertainty we are currently experiencing. While it may take some time, indications are that by mid-summer the City will begin to reopen and a more active buying and selling season in New York City real estate will begin.
Time and again, New Yorkers have proven themselves to be tough and that drive will bring the City back and it will thrive again. New York City has its own unique spirit which is why our home is such a special place!
If you have any additional questions, please do not hesitate to reach out to me and/or our exceptional team members. We closely monitor the market and regularly offer buyers and sellers the benefit of our long experience having worked through a myriad of cycles.
Please stay safe and keep your spirit strong!
Deanna, Ileana, Jane, Cindy, Lynn and Stacey
Proper pricing is key to achieving the highest and best price in the quickest timeframe. However, setting the right price is not always so easy in a soft market with a lot of inventory. There are many options for buyers which gives them the time and opportunity to be deliberate. In the past, pricing at a very competitive asking price or slightly below has sparked increased interest at the outset and even garnered multiple bids. Buyers in today’s market feel they must have a ‘deal’, so make sure to add room for negotiation to your pricing and absolutely do not overprice! Overpricing leads to under-selling. It is important to honestly discuss pricing and strategy with an experienced broker who has a track record in your area and has navigated challenging markets successfully.
First impressions matter. Top-notch staging, de-cluttering and even sometimes minor kitchen and bathroom upgrades will help you achieve the best possible sales price. Even priced appropriately, an apartment can sit on the market if it does not show well, especially in a buyer’s market. The investment in time and/or money up front will save you time and money in the sale of your property. Make sure you work with a broker who knows what it takes to appeal to the broadest audience and make your apartment stand out among the competition.
Be aware that in the current market, inbuilt flawed features that cannot be changed can have a significant negative impact on the value of the property. Examples include lack of views or light, a high maintenance, a low floor and/or limited building amenities. In a strong and competitive market, some of these flaws may be overlooked in exchange for other features, however in a softer market, they are harder to overcome. There are some ways to mitigate some of these through staging, painting, lighting and furniture placement. For others, make sure you are priced appropriately.
Choose a broker who understands how to create an effective marketing strategy that is tailored to your property. Be certain they understand the selling points and can customize an approach to appeal to the most suitable buyers.
Although it is a buyer’s market, there is an advantage for sellers as well. This market offers a wonderful opportunity to ‘trade up’ for a new home that is either larger or has upgraded features to that of your own such as better views, nicer amenities, or superior location. Buying and selling under the same market conditions can be beneficial as the reduced prices on the buy side often make up for the lower sale side.Read More »
Many often think they can “time” the real estate market, but as we know it is virtually impossible. With the current prevailing uncertainty, most buyers are nervous even when the signs show that it has hit or is near bottom. That said, waiting that out may result in a missed opportunity. We think it is an excellent time to purchase a home for the following reasons:
- Fear & Uncertainty Create Opportunity
Most savvy investors will say that when everyone is negative on the market, it is often a good time to buy.
- Mortgage Interest Rates
While already historically low, mortgage interest rates have been further reduced to near record levels.
- Higher Negotiability
Price reductions and sales below their original asking price have become commonplace these days as sellers are still facing the realities of the softened market. Properties that are not priced properly linger and eventually become stale, this creates the impression that there is something wrong with the property or that it is overpriced. Stale properties can represent a great opportunity for a savvy buyer.
- Buyer Incentives
Many new developments are offering buyer incentives whether it’s a break on closing costs or no-cost for a building amenity such as storage or parking.
- Increasing Inventory
As we stated earlier, inventory has been on the rise for the past two years hitting a high in this year’s second quarter. This provides a buyer with a larger selection of properties with less competition.
- Investment Timeline
If you are planning to own a home for 7 to 10 years, you are likely to see a higher rate of return upon sale than in other investments.
- Decreased Competition
The spring market (February – June) is historically the most active period of the year as buyers generally search for a home to buy so they can close in the summer months. In the autumn, between settling into the new season and a new school year as well as major religious/secular holidays, there is less time for the market to heat up. In addition, fewer buyers are focused on purchasing a home during this period which translates to less competition and greater opportunities for good deals.
- Buying and Selling Concurrently
Buying and selling under the same market conditions can be advantageous as the reduced prices on the buy side often make up for the lower sale side. There are some exceptions to this as certain market segments are stronger than others.
- Properties with Flaws
In NYC, everything has a price but in a strong market, buyers will overlook certain flaws to acquire some other features they want. In a weak market, or one that favors buyers with a large inventory, it is harder to overlook less desirable features, and sellers will have to be realistic about value.
As we leave 2018 behind, it is important to survey what happened last year, especially since sales prices and volume decreased dramatically compared to 2017. There are several factors that contributed to the downward market, including:
• The Tax Reform bill, which has significantly affected New Yorkers due to the high state and city taxes that can no longer be deducted from the income tax
• Substantial increase of inventory in new development projects and units
• The loss of foreign buyers due to the depreciated value of foreign currency compared to the dollar
• Increased mortgage interest rates, due to the overall rise of interest rates.
• Domestic political uncertainty, the stock market fluctuations, and increased concerns of depreciation in value property.
All of the above contributed to a dramatic slowdown in residential real estate.
2018 was a year of transition: sellers had to come to the realization that prices were significantly lower, and buyers needed to understand and feel some confidence that the market has come to or near its bottom.
OUTLOOK FOR 2019:
While most sellers have finally accepted the new reality, there will always be some who feel that their apartment is exceptional and believe it will fetch a relatively higher price. And of course, there will be buyers who believe that prices will decrease further and won’t make offers because they want to wait till what they perceive as the “true bottom of the market.”
In addition, the geopolitical and domestic political climate could become even more combative and divisive. This is likely to create continued volatility in financial markets and will affect the residential sales market in New York City. In fact, the market may be as tough as it was in 2018. Nevertheless, many sellers and buyers may hold firmly to their beliefs that the market will still shift in their favor, which will make the broker’s task of bridging the gap even more difficult.
The role of a skilled real estate agent will likely be more important and at the same time more difficult. Brokers need to be knowledgeable not only about real estate markets, but about the financial markets and geopolitical issues as well. Agents will also need to carefully hone their marketing strategies to be effective. Learning top negotiation skills will allow an astute agent to bring about a meeting of the minds between their client and customers, and have both sides feel mutually gainful.
If you’re interested in buying property in NYC, our exclusive Buyer’s Guide will assist you in understanding what is involved in purchasing residential real estate in Manhattan, and will explain how we provide you with the best service throughout the process. Or if you need any further information or valuation of your property, please do not hesitate to contact us. I will be more than happy to answer any of your questions.
All the best–
NYC Real Estate Current Data-Based Snapshot
Guest blog post by Noah Rosenblatt of UrbanDigs.com
Today feels very different when looking back to the NYC real estate market from 2013 to 2015 when there was a continued progressive reflation following a severe housing crash in 2008. Those three years were ‘peak times’ for sellers, where market dynamics included super low inventory, bidding wars, and ever rising price trends. Buyers across all price points had to deal with a lack of supply options, intense competition and concessions in order to beat out competition and seal deals.
Today sellers no longer have the leverage they enjoyed during the peak years. The market dynamics are working in the buyers favor while sellers scramble to adapt. The two critical questions should be: how long will buyers enjoy this combination of favorable market forces and will there be another cycle down?
The 2nd question is a bit easier to answer. Nobody can predict what the markets will do in 6, 12 or even 24 months from now. There are too many external factors that can potentially impact NYC markets.
A necessary way to evaluate the market right now is to only analyze the very recent and current real-time market data. We are now seeing signs of life in the sub-market that started it all, the higher-end price points could be the moment for buyers to act as prices in the very high-end are significantly down from their peak.
More options. More negotiability. Discounts from peak. It’s a recipe buyers should embrace, especially in prime global city markets like Manhattan.
It’s enough to get this data geek bullish given where we have come from and where we are now.
Here are some key takeaways when looking at today’s market vs the peak period in 2015.
1. More Supply Options
2. More Negotiability
3. Discount from Peak*
* We must note that sales price trends lag the market by about 6-8 months. When discussing the peak period in mid-2015, those sales will show in the data approximately 6-8 months after contract execution due to delays in closing and public record filings.
Read more in our Fall 2018 Newsletter!Read More »
We all know renovation and design quality can affect the sales value of an apartment or home. As a top broker in the city for over 3 decades, I have seen my share of successful and unsuccessful renovations. Why is this so? It all depends on choices that an owner makes, starting with the architect or designer. Here are four steps and suggestions to consider if you want the best results when selling:
- Hire an architect/designer with a track record of successful sales. Most owners look at the design results in photos and even current finished properties that were designed by the architect/designer. But if you are interested in resale down the line, find out how many have sold successfully! That is an important and not a standard question.
- Look at properties you have liked that have sold – even had mulitiple offers and see what designs are selling. What do each have in common with the other?
- Ask your favorite agent about which apartments they have seen that have sold extremely well. Get their ideas of what has sold and why. Ask them if they know of an architect or designer where the apartments have consistently sold well.
- If at all possible, go to see a recent renovation of an architect/designer whose designs sell well. Step into the apartment and get a feeling for it to make sure that you will be happy living in it.
Read More »
This market is less active than the 5-room co-ops. Currently there are 15 contracts signed with an average of 104 days on market which means there is 1 in contract to almost 3 active listings and average price is down from last year by 10%. There are more sales happening but at lower prices. It is a good time to buy in this category!Read More »
In the first of our sub-market series, we review the 5 room co-op market on the Upper West Side where there are 41 current active listings and 20 pending contracts. This reveals a volatility index of 2 (where supply is 2 times the number of pending sales). This lower index shows a strengthening market. This is certainly a good time of year to purchase a property this size, as interest rates are still relatively low and sellers either have come down in price or have shown increased negotiability in the late summer months.
In terms of closed sales over the last 3 months — this year is much stronger. In the last 3 months, there have been 33 closings and in the same time period last year there were only 23. Also this year the average sales price is up 11% from the same time period last year. All good signs for the 5 room upper west side coop market!Read More »
Establishing the right price to list a property in the current market is challenging. Data has declined due to lower sales volume and prices have come down in most market segments. Typically we analyze comparable sales activity over the last six months, however this is no longer an accurate reflection of the market. Properties that closed six months ago reflect the market over nine months ago when they went into contract and that was a different world. I recently studied a particular market segment that I had analyzed only three months prior and I was astonished at my recent findings. Prices were down in the segment between 4 and 10% since April! There is not a lot of data but the numbers are showing a significant drop. The most accurate pricing indicators are properties going into contract right now. The ability to get that information is key to understanding where the market is in any particular segment.
Part of the problem is there are not a lot of properties going into contract. It is important to look at where properties are priced right now and anticipating where the market might be two to three months down the line. The most successful sales have been properties that have dropped significantly (5 – 10%) in one fell swoop. These price reductions tend to attract attention depending on how high you started. If you started where properties were six months ago and you drop 5% than you should be in a much better place.
Sellers have to be bold on pricing and willing to come down lower than they may have wanted. If a seller is not prepared to do that right now than their property may sit and stale listings do not do well in any market. My advice to sellers right now is to think carefully about pricing and how much you need to sell in this market. The market may turn but it is very difficult to predict when so it all depends on your timeline.Read More »
Given the steep drop in the stock market, buyers as well as sellers are asking me if this is the right market to buy or sell. For now, I will address the sale side. For those considering selling, this may be one of the better times for the foreseeable future. I say so not because I am a broker and obviously I can benefit from sales, but because of many other factors that bear directly on the market, providing sellers (and buyers) the opportunity to make deals that are mutually beneficial.
To begin with, the state of the stock market does not reflect the nature of the economy. Stock market fluctuation is not a strange phenomenon; the market goes up and down, and even when it occasionally does so precipitously, it does not suggest that an economic shakeup is in the offing. The real estate market responds to many other economic indicators, especially interest rates, the level of unemployment, earnings, bonuses, and the general health of the economy, consumer confidence, along with the supply and demand of residential real estate.
Sellers who wish to sell should put their property on the market this spring for the following reasons:
First, the market has been weaker over the past few years and we are coming off a weaker fall season where there were fewer sales and therefore lower sales prices. The first and particularly the second quarter of the year are the most active times in an annual cycle because of buyers’ desire to move over the summer. This is most often the best time for sellers to attain higher prices.
The second reason is that it has already been indicated that the Federal Reserve will again increase interest rates. This often prompts buyers to buy now rather than that wait and end up paying higher mortgage interest rates.
Third, bonuses are generally higher and many first-time buyers will try to take advantage of the softer market conditions and buy now. Thus, the potential that sellers can achieve relatively higher prices because of the anticipated demand is much more promising.
Fourth, waiting for the prices to increase may not be wise because, as I indicated earlier, we are now about to begin the high season, and the market will definitely slow down once the summer comes around. As a rule, in a slower market, prices dip and sellers may not be able to achieve as strong a price.
Based on the above, I encourage sellers who need to sell, not to wait any longer. With effective marketing and skilled brokers, sellers can achieve the strongest possible prices that the market will bear.
If you need any further information or valuation of your property, please do not hesitate to call or write to 646-665-4961 or to email@example.com. I will be more than happy to answer any of your questions.
All the best–