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.