Burst of Activity Ahead?
Burst of activity ahead?
By Lauren Elkies
The calendar says back to school, and for the real estate industry that means back to business and an end to the summer doldrums. Watch for the end of the month to be marked by closings of spring deals, an influx of homes being listed (or re-listed) and buyers taking out their checkbooks.
But although fall is typically when the market goes on an upswing, this year, buyers are still expected to be hesitant to pull the trigger, and September data is expected to be somewhat off from years past as economic uncertainty lingers.
"September is probably going to look like it did a few years ago. It's normally a light month for activity [in the beginning of the month] but is expected to be less than last year. The fall market begins to see increased activity toward the end of September, peaking at the end of October," said Jonathan Miller, president and CEO of appraisal firm Miller Samuel.
Last month real estate practitioners said that some buyers were still away for the summer, while those in the city were taking their time making a decision.
"We have found, as others, that traffic is down a bit and that buyers are more selective in what they are buying and when they are buying as well," said Kenneth Horn, president and founder of development company Alchemy Properties.
And, as the pace of sales slowed, real estate pros said that inventory increased in August.
"There is a lot more inventory now than at the beginning of the year, so the selection process for buyers is taking longer," Corina Saldivar, a sales agent at DJK Residential, said late last month. "Buyer perception in August has also been challenging because buyers assume that sellers are under pressure and buyers want concessions, but it is not always the case in New York."
Meanwhile, earlier this summer inventory patterns were somewhat characteristic of the two past summers. Between June and July, the most recent two-month period for which data was available for comparison, inventory dropped 6 percent to 6,796 homes, data from Miller Samuel show. The reason for the decrease, Miller said, was that July data reflected sales negotiated in the spring and homes were taken off the market in order to re-list them in the fall.
This quarter will likely be off from years past with the fallout from the credit crisis affecting sales figures.
"Third quarter closings should be higher than second quarter, due to normal seasonal factors," said Gregory Heym, executive vice president and chief economist at Terra Holdings, parent company of Brown Harris Stevens and Halstead Property. "I would expect to see fewer closings than a year ago, as confidence in the economy continues to decline and layoffs begin to take effect. Mortgage rates have also risen, while mortgage standards remain strict, which has further weakened demand."
Prices will likely drop a bit in the third quarter as fewer sales from 15 Central Park West and the Plaza, which have been skewing the numbers, close. But Miller said the projects have not had as great an impact on the data as people may think.
"It will remove some of the upward price influence to the overall numbers caused by new development, but not entirely," he said. "The influence of these two projects on the second quarter overall median sales price was only 3.2 percent compared to the same period last year."
High hopes for September sales
The fall season is upon us and sales brokers are hopeful about business this month. The Real Deal sent out its monthly survey to see what individual brokers had to say about business. Here is a sampling:
Steven Parrino, associate broker at Brown Harris Stevens: The price range of buyers has not changed much but buyers are less willing to purchase properties that require renovations. If they are spending $3 million on a classic six then it needs to be in great condition.
Darren Sukenik, executive vice president at Prudential Douglas Elliman: I expect September to be busy. I have buyers waiting to pounce; they all seem to think September to February is when they will be doing so.
William Vilkelis, vice president at Barak Realty: Condos and luxury properties are showing good turnouts, although not necessarily the number of offers experienced a year ago. Co-ops seem to have backed off on price a little bit, sitting on the market longer, and sellers sense this. Many sellers I've spoken with are of the mind-set that they will wait until after the election, after the uncertainty of who the next president will be, before deciding to sell.
Adina Azarian, founder and CEO of Adina Equities: Rentals [were] a little slow in August, but overall we had a very good month. I am expecting September to be extremely busy with rentals.
Naomi Muramatsu, director of sales at Bond New York: New development and condo conversion closings typically lag behind the market by one to two years, and there are great numbers of closings scheduled for September. Even though the spring season was rather sluggish, those closings will raise the sales volumes that we saw in the first and second quarters.
Corina Saldivar, sales agent at DJK Residential: In the beginning of the year, the New York City market was steady, but the inventory grew very quickly in the spring. I predict prices will head down in the third quarter compared to the first half of the year.
Jorden Tepper, executive director of sales at Century 21 NY Metro: In the third quarter I suspect that number of transactions will have trended downward from the second quarter and pricing will remain somewhat stable, with fringe markets suffering more than prime Manhattan locations.
Lisa Strobing, executive vice president and sales manager at Bellmarc Realty: Considering the news we're hearing across the country, the news coming out of New York City is pretty impressive. You'll probably see a slight reduction in total sales volume. Prices will be about 5 percent lower than last year's numbers.
