As the market is about to rev up after taking a brief end-of-summer pause, let’s take a look at this summer’s activity as an indicator of what’s to come in the following months.
Although activity typically slows during the summer, this year July and August turned out to be unusually busy. The number of contracts signed in both July and August were up double digits over a year ago, while negotiability for buyers and average days on market both declined.
What factors helped maintain momentum during the dog days of summer? An improved outlook for Europe’s economies and growing consumer confidence in the US both played a role. Here in New York the frenzy for condos filtered down to the coop market. Strong demand and low inventory remained the driving forces affecting the market.
The lack of supply forced many buyers, who expected to close on an apartment this summer, to continue their search for a new home. They may have been out of the city but they tracked the market on the internet, and returned to the city to view any newly listed or back-on-the-market properties. Other buyers, braced for another tight market this fall, house hunted over the summer hoping to beat out the competition and avoid potential bidding wars this fall.
A change in interest rates also came into play. Some buyers wanted to buy before rates, already on the rise, took another jump. A flurry of activity in mid-August was likely spurred by a temporary drop in rates. While it wasn’t a big drop, any rate change can make a difference.
The high level of activity this summer and the on-going lack of inventory point to an unusually busy fall market this year. Now that schools are back in session and the major Jewish holidays have past, we are already seeing an uptick in activity, which we fully expect to build over the next several months.Read More »
Given all the news stories and media hype, it appears to the average buyer that no property remains unsold, but that is not true. Due to the high expectations created by this “sellers’ market,” owners are often tempted to price their units too high. This is a misguided approach. Many sellers don’t realize that there are significant risks to overpricing, even in such an active market. Establishing listing prices that are only 5-10% higher than market value can critically ‘wound’ an apartment for sale.
This is true especially for un-renovated apartments and units without modern amenities and finishes. Apartments in non-prime locations are even more affected as they do not have the all-important “location factor” to fall back on. Additionally, the manner in which an apartment shows is critically important and can make or break a good sale. Each dated apartment competes with the pristine and up-to-date finishes and amenities in newer condominiums. In these cases it is critically important to listen to an experienced broker’s advice regarding staging and pricing.
Even in an active market, overpricing can initiate a cycle that has a damaging effect on the market’s perception of the property. With so much information now widely available, buyers are significantly savvier than they were just a few years ago, and are much more likely to recognize if a property is overpriced. Buyers in our market tend not to make low offers, and most often will not bid at all on something overpriced. The property then runs the risk of sitting on the market for weeks. And to make matters worse, if a seller is convinced of his apartment’s value, and only offers a small price reduction after some time on market, the cycle of no or low offers will continue. This creates the concern among buyers that “something is wrong” with the property. The sad reality is that most often, these concerns are not justified. In fact, it is an opportunity for a buyer to negotiate a sales price in line with the market without the unpleasant bidding competition of a well-priced apartment just coming on the market.
Below are strategies to prevent ‘wounding’ an apartment or to reinvigorate the property if the listing has become ‘stale.’
- Price appropriately right from the start and you may achieve a quick sale at or above your asking price. Some owners who receive multiple bids feel that they underpriced their homes. While it is normal to feel this way, bear in mind that in an active market, the highest prices are often achieved this way.
- If offers do not materialize within the first few weeks, drop the price dramatically right away. Do not make small incremental decreases as this will only serve to undercut the apartment further.
- If the steps above do not elicit offers, it may be time to take more aggressive measures. A strategy that has worked for sellers who do not want to sit on the market any longer is to systematically lower the price until you receive offers. Do not wait too long in between price reductions. This strategy will only work well in a very active market.
For the many buyers who are having a hard time with bidding wars and cannot purchase what they want, my advice is to look for stale listings. Don’t assume that just because a property has been on the market for a long time there is something wrong with it. Be analytical and research whether there is truly anything ‘wrong.’ If you find a ‘wounded’ apartment and want to investigate why it hasn’t sold, take the following steps:
- Ask the agent why the unit has not sold. Don’t assume he/she is trying to “sell” you. Depending on the veracity of the agent, you may or may not learn something of value. In these cases, a buyer may be wise to use an experienced agent to give them proper advice.
- Research and compare other recent sales in the building. If there are recent sales, do they support the price? Remember, the larger the apartment, the higher the price per square foot.
- Have your attorney review the financials to identify any potential problems or risks with the building.
If a buyer can step away from the emotional perception that something is wrong with the apartment and can carefully consider the larger picture, it is possible that a reasonable deal can be achieved.Read More »
The media has been doing a great job of spreading the word that the real estate market is red hot again. CNN.com, along with many others, reported news recently that a nationwide home price index (S&P/Case Shiller) was up 12.2% in May as compared to a year ago–the biggest such increase since March 2006. CNN’s headline: “Home Prices Keep Soaring.
In Manhattan, there’s been a steady stream of coverage on packed open houses, multiple offers and bidding wars, along with plenty of stories on how to beat out the competition, like these from the NY Times: “In a Seller’s Market, Every Minute Counts” and “Gaining the Upper Hand.” No wonder so many are under the impression that we’re back to the days of non-stop buyer frenzy and rising prices.
Prospects have definitely improved for sellers since the market hit bottom, but today’s reality isn’t quite as it’s portrayed in the media. For instance, that nationwide index is still down 24.4% from the peak in June 2006. And while real estate in Manhattan has fared far better than most markets, certain segments are languishing, while others are thriving.
Condos of all sizes and price points—whether new development, conversion or resale—are selling extremely well and gaining a larger share of closed sales as compared to coops. Condos have always been a must for foreign buyers and investors shopping in our market, but now more and more US homebuyers prefer them to coops with their stricter requirements, lengthy approval process and potential board turndowns.
Coops are selling well enough at the lower and upper ends of the market, but much less so in the mid-range of $2 to 5 M—a category that was strong only a few months ago. Those coops that do sell quickly in the mid-range have unique qualities, show well, and are realistically priced. Despite a notable lack of inventory, prices for mid-range coops are not being driven up by demand. It remains to be seen if this trend continues.
Yes, these days we do see many crowded open houses, bidding wars and discouraged buyers who have lost out on several properties. And drawing attention to this aspect of the market makes for compelling reading. Missing from all this coverage though is a realistic picture of our uneven market, and of a previously highly desirable category of property that, at least for the moment, has fallen out of favor with buyers.Read More »
I have just launched my newly redesigned website and I am very excited to tell you about why it is special and how helpful it can be to those in the NYC real estate market. The central idea behind the new site was that it would be dynamic in nature, contributing expert analysis on current market news and trends as it happens while providing new tools and guides as soon as they become available. We can react to the market and provide you with the best tools and information at the right time. This makes this site a vital resource for buyers and sellers. Rebuilt from the ground up, there are many great features that I would love to share with you:
- All of our listings – active, in contract and closed – are featured in real time so you can feel confident the information is always accurate. Outside of brokerage firms, this is an exclusive feature that no other individual agent can offer.
- Our exclusive properties appear in a user-friendly interface, organized as you wish by address, price and neighborhood as well as mapped.
- Resources for buyers include the mortgage calculator, a “perfect home” finder, a downloadable Buyer’s Guide and information about local neighborhoods.
- Sellers can access our ‘Art of Staging’ guide and review all of the creative marketing tools we can produce to achieve optimal exposure for their property.
- Exclusive market resources including guides on Owning a Townhouse and Staging among others and all of our newsletters past and present including Condo, Seasonal, Riverside Drive-West End Avenue, Luxury and Central Park West.
- Our exclusive photography book series including ‘Living on Central Park West’, ‘Living on Riverside Drive’ and ‘Living on Park Avenue’.
- Our complete list of nearly 400 architectural histories that we have written on the City’s top buildings that can be requested at any time through the site.
- Sign up for our monthly eNewsletter that will provide you with the most current market information, quarterly reports, current market data and more.
- Regular blog posts on current trends, market news from an insider perspective and essential tips.
I hope that this new website provides you with the tools and information that will help you understand and navigate the New York City real estate market. I am always happy to answer any questions you have!
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It is common for sellers who love their property to feel that it should sell for a better than market price! That tendency is exacerbated in a strong market. Experience shows that overpricing in a strong market can really hurt the ultimate sales price as people brand the property early on as “pricey” and the seller to be “unrealistic”. First impressions do matter. It is easy for me to say “be careful not to overprice”, but when the media has hyped the strength of the market, it is often hard for sellers to heed brokers’ cautionary advice on pricing.
The common wisdom and my own experience has shown that proper pricing is crucial no matter the strength or weakness of the market. It is particularly important to “get the pricing right” when the property is first listed because that is when there is the highest level of activity and excitement. In an active market, a well-priced apartment can often generate a bidding war that results is an above-market value – sometimes significantly so! Whereas an overpriced property will sit and become stale quickly – especially if other properties are actively selling.
A common misconception among sellers is that the initial flurry of activity and early offers on their apartment especially occurring in the first week or two of listing means: 1) that the property was underpriced. Indeed the opposite is true: the property was properly priced if such a scenario occurs, and/or 2) that the initial excitement will remain consistent and that there will be higher offers. Well, that may or may not happen but historically, the old adage, “first offers are the best offers” most often is true!Read More »