Power Shifts to Buyers
03/12/2008, By Lauren Elkies
It has been a while, but Manhattan home buyers seem to be getting the upper hand, with prices starting to soften and qualified buyers taking their time to shop around.
"I think the time of overpriced listings is gone for now," said Lawrence Rich, vice president and associate broker at Prudential Douglas Elliman. "For the first time in a long time, buyers have been able to negotiate a bit."
The room to negotiate coupled with lower interest rates are making for "favorable conditions" for buyers, he said. "The negative," he noted, "is that getting financing is more difficult."
Other pros like Steven Ganz, a broker and executive vice president at CORE Group Marketing, had a similar assessment.
"Across the board we are seeing a slight slowdown in sales volume and velocity, leaving sellers and developers to lower prices slightly to make deals," Ganz said.
Sales slipped noticeably in January from December, according to the most recent research available from Gregory Heym, executive vice president and chief economist for Terra Holdings, parent company of Brown Harris Stevens and Halstead Property. There were 697 sales in January in Manhattan, a 10.5 decline from December's 779.
At the same time, the median sales price of Manhattan condo, co-op and cond-op apartments dropped in January from the month prior to $850,000 from $928,378 — a 9.2 percent change, Heym determined.
Heym did not put much weight into the month-to-month change.
"I don't think there's any specific reason why the median price fell from December to January," Heym said. "Monthly data can fluctuate a lot, and I think it's more a function of December's numbers being abnormally high than the January numbers falling."
But, the data seems to reflect some level of uncertainty among buyers who are still in a holding pattern following the credit crisis.
"Buyers in banking-related industries are skittish, as they are having market-related fallout within their industry," CORE's Ganz said. "They constitute a good sized chunk of New York buyers, and they are telling each other to wait to buy, that the New York City real estate market will fall significantly."
Although a number of brokers say that there remains a dearth of property available, a market slowdown was evident in the growing Manhattan inventory, which reached the highest level since April 2007.
Inventory rose in January from December by 9.4 percent to 5,926 condo and co-op units and townhouses on the market, the most current research from Jonathan Miller, executive vice president and director of research for Radar Logic, shows. Co-ops saw the greatest increase between December and January at 16.5 percent, to 2,626 in January from 2,254 in December. Condos dropped 4.1 percent and townhouses 1.1 percent.
Like Heym, Miller did not find the numbers remarkable.
"Co-ops increased [more] because they are nearly all resales and it is expected to see more units come on the market after the New Year in anticipation of the spring market," Miller said. "Condos include a large portion of new development, and those units are less responsive to seasons — they come on the market as they are ready to be sold. Townhouses are such a small sector, the stat may or may not reveal anything."
A weakening was evident in the rental market. Rents continued to go up in January from December, but at a much slower pace than between November and December. January rents averaged $3,221 a month, $1.50 more than December's $3,219.50, data from Citi Habitats indicate. Between November and December, the jump was $5.25.
Some real estate pros speculate that the sales market does not look much more promising in March.
"I think that prices will remain level with recent comps or drop slightly, not dramatically. Properties will remain on the market longer, and the amount of transactions will decrease somewhat," Ganz of Core said.
Radar Logic's Miller said he expects the seasonal increase of inventory through April to be compounded by the influence of the credit market.
"In light of the credit situation and its restraint on transaction activity, it would be reasonable to expect lower sales growth through the spring as well as a faster rise in inventory," he said.
Meanwhile, some brokers said that the slowing market is helping their business.
"The prices are still flat, and most asking prices are proving somewhat negotiable for the most qualified buyers," said Ann Ferguson, managing director at Klara Madlin Real Estate. "Sales and rental volume is beginning to pick up from January, which was very quiet."
Keeping or losing faith?
Many residential real estate brokers, developers and marketers are saying that Manhattan has been impervious to the credit crisis, while others cite its effects on the market. In a survey The Real Deal sent out last month to people in the field, real estate pros expressed varying levels of confidence in the market.
Dan August Cordeiro senior managing director, Corcoran Sunshine Marketing Group
I expect that new buyers that started looking at property in January, but were skeptical or waiting for prices to fall, will start to lose out on property they are interested in, creating a sense of urgency and getting them to purchase in March and April.
Jessica Armstead vice president and associate broker, the Corcoran Group
Recently, there have been increasing resales in new developments. If you bought in a development with 200-plus units and 15 units are on the market, you will most likely find yourself negotiating in order to make the sale.
Michael Signet director of sales, Bond New York
I thought that we might see a bit of [price weakening] at the end of 2007, but once the bonus money hit the streets and buyers realized that the credit crunch was not that relevant here in Manhattan, any thoughts of a weakening market disappeared.
Jeff Krantz vice president of sales and marketing, City Connections Realty
Developments that are near completion [are faring best this month]. Buyers aren't feeling the pressure to buy off of a piece of paper because they don't believe prices are going to skyrocket from this month to [the] next.
Barak Dunayer president, Barak Realty
This month, I expect to see generally healthy activity but not explosive growth. Sales volume: 5 to 10 percent less; prices: flat; days on market: up 10 percent.
Kenneth Horn president, Alchemy Properties
Buyers are 'shopping' more, and they are coming back to look at units two or three times before they actually buy. The process now takes about two to three weeks as opposed to two or three days.
Sang Oh director of sales and marketing, Platinum Properties
Buyers are hesitant to sign off on an apartment, and sellers are reluctant to accept lower offers. Those that are actively in the market now can get some good deals from both developers and resales.
Rochelle Bass executive vice president, Bellmarc Realty
Buyers are on the fence waiting to see if prices will come down because of the credit market crisis. It is mostly in the under $3 million market. [But] I do not see a decline in price.
"I think the time of overpriced listings is gone for now," said Lawrence Rich, vice president and associate broker at Prudential Douglas Elliman. "For the first time in a long time, buyers have been able to negotiate a bit."
The room to negotiate coupled with lower interest rates are making for "favorable conditions" for buyers, he said. "The negative," he noted, "is that getting financing is more difficult."
Other pros like Steven Ganz, a broker and executive vice president at CORE Group Marketing, had a similar assessment.
"Across the board we are seeing a slight slowdown in sales volume and velocity, leaving sellers and developers to lower prices slightly to make deals," Ganz said.
Sales slipped noticeably in January from December, according to the most recent research available from Gregory Heym, executive vice president and chief economist for Terra Holdings, parent company of Brown Harris Stevens and Halstead Property. There were 697 sales in January in Manhattan, a 10.5 decline from December's 779.
At the same time, the median sales price of Manhattan condo, co-op and cond-op apartments dropped in January from the month prior to $850,000 from $928,378 — a 9.2 percent change, Heym determined.
Heym did not put much weight into the month-to-month change.
"I don't think there's any specific reason why the median price fell from December to January," Heym said. "Monthly data can fluctuate a lot, and I think it's more a function of December's numbers being abnormally high than the January numbers falling."
But, the data seems to reflect some level of uncertainty among buyers who are still in a holding pattern following the credit crisis.
"Buyers in banking-related industries are skittish, as they are having market-related fallout within their industry," CORE's Ganz said. "They constitute a good sized chunk of New York buyers, and they are telling each other to wait to buy, that the New York City real estate market will fall significantly."
Although a number of brokers say that there remains a dearth of property available, a market slowdown was evident in the growing Manhattan inventory, which reached the highest level since April 2007.
Inventory rose in January from December by 9.4 percent to 5,926 condo and co-op units and townhouses on the market, the most current research from Jonathan Miller, executive vice president and director of research for Radar Logic, shows. Co-ops saw the greatest increase between December and January at 16.5 percent, to 2,626 in January from 2,254 in December. Condos dropped 4.1 percent and townhouses 1.1 percent.
Like Heym, Miller did not find the numbers remarkable.
"Co-ops increased [more] because they are nearly all resales and it is expected to see more units come on the market after the New Year in anticipation of the spring market," Miller said. "Condos include a large portion of new development, and those units are less responsive to seasons — they come on the market as they are ready to be sold. Townhouses are such a small sector, the stat may or may not reveal anything."
A weakening was evident in the rental market. Rents continued to go up in January from December, but at a much slower pace than between November and December. January rents averaged $3,221 a month, $1.50 more than December's $3,219.50, data from Citi Habitats indicate. Between November and December, the jump was $5.25.
Some real estate pros speculate that the sales market does not look much more promising in March.
"I think that prices will remain level with recent comps or drop slightly, not dramatically. Properties will remain on the market longer, and the amount of transactions will decrease somewhat," Ganz of Core said.
Radar Logic's Miller said he expects the seasonal increase of inventory through April to be compounded by the influence of the credit market.
"In light of the credit situation and its restraint on transaction activity, it would be reasonable to expect lower sales growth through the spring as well as a faster rise in inventory," he said.
Meanwhile, some brokers said that the slowing market is helping their business.
"The prices are still flat, and most asking prices are proving somewhat negotiable for the most qualified buyers," said Ann Ferguson, managing director at Klara Madlin Real Estate. "Sales and rental volume is beginning to pick up from January, which was very quiet."
Keeping or losing faith?
Many residential real estate brokers, developers and marketers are saying that Manhattan has been impervious to the credit crisis, while others cite its effects on the market. In a survey The Real Deal sent out last month to people in the field, real estate pros expressed varying levels of confidence in the market.
Dan August Cordeiro senior managing director, Corcoran Sunshine Marketing Group
I expect that new buyers that started looking at property in January, but were skeptical or waiting for prices to fall, will start to lose out on property they are interested in, creating a sense of urgency and getting them to purchase in March and April.
Jessica Armstead vice president and associate broker, the Corcoran Group
Recently, there have been increasing resales in new developments. If you bought in a development with 200-plus units and 15 units are on the market, you will most likely find yourself negotiating in order to make the sale.
Michael Signet director of sales, Bond New York
I thought that we might see a bit of [price weakening] at the end of 2007, but once the bonus money hit the streets and buyers realized that the credit crunch was not that relevant here in Manhattan, any thoughts of a weakening market disappeared.
Jeff Krantz vice president of sales and marketing, City Connections Realty
Developments that are near completion [are faring best this month]. Buyers aren't feeling the pressure to buy off of a piece of paper because they don't believe prices are going to skyrocket from this month to [the] next.
Barak Dunayer president, Barak Realty
This month, I expect to see generally healthy activity but not explosive growth. Sales volume: 5 to 10 percent less; prices: flat; days on market: up 10 percent.
Kenneth Horn president, Alchemy Properties
Buyers are 'shopping' more, and they are coming back to look at units two or three times before they actually buy. The process now takes about two to three weeks as opposed to two or three days.
Sang Oh director of sales and marketing, Platinum Properties
Buyers are hesitant to sign off on an apartment, and sellers are reluctant to accept lower offers. Those that are actively in the market now can get some good deals from both developers and resales.
Rochelle Bass executive vice president, Bellmarc Realty
Buyers are on the fence waiting to see if prices will come down because of the credit market crisis. It is mostly in the under $3 million market. [But] I do not see a decline in price.
