After A Decade, What Still Wows Me

The bread and butter of a real estate business is having properties to sell.  Thank goodness for the ownership of Vanderbilt Appraisal Company, who give me and my team accurate information about the number of listings in Manhattan and help me understand trends and forecasts.  Their recent report showed that the sales volume actually dipped slightly in the 4th quarter of 2011, which was part of most of the quarterly reports issued by my firm, and others.   The report also showed that irrespective of price, the speed of absorption slowed by about 5-7% in the 4th quarter.  I consult with them to ensure best pricing strategies for my clients.  Regularly- and Michael Vargas, one of the owners, won’t hesitate to call me from the road to give advice.  This service is invaluable. 

Good Enough to Eat

This is across the entire marketplace of Manhattan.  And there is no “seasonal adjustment,” no real tweaking of the numbers.  One would usually expect to see a slowdown at the end of the year, as we usually do.  And out of the gate, which I felt was going to happen in 2012, was a massive pickup in buyer interest, combined with an inadequate amount of listings added to the market. 

Where I do the majority of my business, on the Upper West and Upper East, large apartments are in huge demand and low supply.  Prices are absolutely moving up.  Inventory is below 6 months (6-9 months’ of supply is considered equilibrium), and for $500-999k properties on the West Side, the supply is below 4 months.  Between $1-1.5mm, it is not much greater. 

Hence, we are seeing bidding wars, especially for condominiums.  Well-priced properties are selling at the asking price or above.  Please connect me with your friends and colleagues thinking of selling. 

I wanted to share a bit about what’s going on right now, not last quarter, and some new listings as well:

1) West 23rd Street condominium.  I actually struggled with the seller about pricing.  He felt I was going to price it too high.  The end result?  What was a $935k listing went into contract at $975k. 

2) West 110th Street condominium.  30 people at a first open house, accepted offer over asking price one day later. 

3) Lovely Riverside Unit- 30 people at the first open house- lovely 2 bedroom with River Views and serious interest. 

4) Gorgeous townhouse overlooking the Morris-Jumel Mansion- Where’s that you say?  We have buyers across Manhattan and NJ who want to see it.  Step back in time for under $2mm.

5) Third avenue and 18th street- gorgeous Jr4 (one bedroom plus dining area) with full open house last sunday-  serious interest here, too

Ceiling Height, gorgeous Light, and details

6) Perfect Brooklyn Heights 2 bedroom- bringing on this weekend- serious interest already

7) 19th between 6th and 7th avenues- I had 10 showings last week and offers in negotiation.  Come on in.

There is so much activity across the marketplace- except perhaps with one-bedrooms, which have been neglected as of late.  Deals, folks, deals to be had.

So I titled this month’s main post as “What still wows me after a decade.”  I am referring to my being in the Residential Real Estate business as an associate broker for nearly a decade.   Right now, what gets me is the dynamic nature of this market- active, interesting, ever-changing, full of mood-shifts, psychology, moving pieces, and more.  It’s amazing to put my finger on the pulse, working with buyers and sellers, and see the different factors.  Right now, downsizing Manhattanites are driving the large apartment market.  Wealthy retirees are pushing the 2-bedroom market.  And professionals are bound to begin pushing the 1-bedroom market.  Rates are so low right now that as the economy continues to stabilize and improve, sales volume will pickup there, too.

What still wows me about residential real estate from a visual standpoint is quality and views.  I wrote yesterday about my trip to the One 57 sales office.  Quality workmanship on display in combination with perhaps the best views in the city.  I feel badly for those at Metropolitan Tower losing their North views of the Park (and the essex house sign).  The skyline will be forever changed.  Central Park remains the beating heart of the city.  I enjoy being in it for morning runs regularly.  Even on a recent snowy morning, the only snowy morning this winter, for the Manhattan Half Marathon.  When 5000 people run a race in 4.5 inches of snow, Central Park is clearly a special place.  Looking out over its expanse, from above and within, will forever remain my Wow. 

Special design, with hat tips to interior designers like Thomas Juul Hansen, and so many others, make apartments inspiring places to live and work, especially when they are smaller than one would like.

Stories to tell, aspirations and dreams, all happening here in New York City.  That is also what still wows me. 

Have a great month,
Scott

Brown Harris Stevens 2011 Wrap-Up

Brown Harris Stevens is the exclusive New York City affiliate of Christie’s International Real Estate, which means that we hold our Annual Meeting at 20 Rockefeller Center, where the large auctions are held.  The relationship means worldwide coverage and relationships with the best in class brokers everywhere around the globe.

Quality stands the test of time

It also means we get some insight into the art markets, what is selling, what isn’t, and where things are in relation to their sales in recent years. 

Recently, Brown Harris Stevens held its 2012 meeting, wrapping up the achievements of 2011.  I wrote about this last year, with much fascination about what an amazing company I work for. 

With only 336 brokers, BHS dominated the high end of the market.  My fellow brokers and I sold 26% of all Condominiums priced $7mm or higher.  33% of all cooperatives above $7mm, and 20% of all townhouses over $7mm.  This is up year over year from 2010.  Over $20mm, these percentages jump to 31% (condos), 40% (coops, up from 38% in 2010), and 30% (townhouses), respectively.

The firm’s brokers sold 1617 properties (down from 1736 in 2010).  And like 2010, 37% of those sales were done between 2 BHS brokers.  The total sales volume was up 22% from 2009 as well, though down a touch (3.5%) company-wide from 2010.

The average sale price per broker in Manhattan was $2.246mm, and average value of properties sold per broker was $8.524mm.  What amazes me most is that we comprise fewer than 2% of all Manhattan and Brooklyn licensees. 

Now, overall, the 2011 year was not the best in BHS’s history, as 2010 was.  However, my office, the Upper West Side location on 64th and Broadway, did have its best year ever.  Up 2% from 2010. 

In total, really an impressive year for my firm.  I’m very proud of the work that I do for my clients, and still thrilled to work at such a marvelous place.

-Scott

Interesting Perspective on Foreign Buyers

Michael Stoler does some great primary research into multi-family, hotels, commercial property trades- which informs my business but isn’t my primary focus.  The overlap in this week’s email was interesting.  If you care to read below, he goes into detail about the rental buildings different REIT (real estate investment trusts) are purchasing.  But what I’m seeing on a ground level is that individual purchasers are picking up performing rentals, earning 3-4% returns.  Worth a read below, too:

This is what he had to say:

___________________________________________

Everyone wants to own residential apartments in New York City, especially Real Estate Investment Trusts
 
In the world of real estate and business, some people “put their money where their mouth is”. It looks like the president and ceo of UDR, owner and manager of more than 62,000 apartment units is doing exactly what he is saying.
 
In November at REITWorld 2011: NAREIT’s Annual Convention in Dallas, Tom Toomey, president and CEO of UDR, Inc, was quite confident about the short term and long term fundamentals in the apartment sector, noting that 2011 has been a great year. The company had done more than $4 billion in transactions and had spent $ 1 billion in the New York market alone.
 
As reported in REIT.com, Mr. Toomey discussed the company’s plan in the New York market and said that the recent transaction represented two different strategies. The first are undermanaged properties with a potential upside for redevelopment and he said the other is an investment in the financial district next to the rebuilt world trade center area. He said, “All of that office space that you find down there is being occupied and when you look at the submarket what you find is there’s very little housing, so we decided to make a significant investment, a little over $600 million, in buying two building right down in the financial district.”
 
He was bullish on the market noting that “We are coming off a generation low, but even as the supply doubles it will not keep up with the demand side of that equation. The demand between now and 2015 and 2016 looks like there are about 4 to 5 million rents on top of the 40 million. We can’t meet that demand so I’m not worried about overbuilding at this point.”
 
Earlier this month, UDR as a partner in a new formed real estate joint venture with MetLife, wherein each party owns a 50 percent spent $1.3 billion in the purchase of 12 operating communities containing 2,528 apartment homes. A total of 710 apartment units are located in Columbus Square, a recently development, high rise apartment building located on the Upper West Side of Manhattan. The joint venture paid $630 million or $877,324 per unit for the residential portion of the buildings.
 
The sale by the partnership of Stellar Management and the Chetrit Group of the five tower complex, located on Amsterdam and Columbus Avenue did not include about 400,000 square feet of retail and 392 parking spaces.
 
It was just last month that Harry Alcook, SVP, at UDR, said, “If you were to say $1.5 billion to $1.8 billion in New York City is a reasonable target over the next couple of years that is probably the right kind of number.”
 
The purchase of the apartments in Columbus Square represents a significantly higher price than they paid earlier in the year when they acquired the 493 unit rental building 10 Hanover Square. The REIT paid $260.8 million to the Witkoff Group, for the property which included 41,650 square feet of retail space. The company estimated that the purchase price excluding retail, at $484,000 per apartment.
 
Over the past few years, the major owners of residential rental multi family apartments in New York City include REITs and organizations which include UDR, Equity Residential and Archstone. In December, Archstone acquired the 209 unit apartment property at 377 East 33rd Street on First Avenue, across from the NYU Langone Medical Center. The company paid $131 million or $626,794 per unit.
 
In the third quarter of 2011, UDR acquired three apartment properties, containing 1,423 units for $911 million in Manhattan. One of the properties is Rivergate, a 706 unit apartment community, one block away from 377 East 33rd Street. The company paid $443.4 million, or $628,045 per unit for the 35 story, apartment building which included 24,315 square feet of retail and commercial space an a 125 space parking garage.
 
The REIT also purchased the 210 unit, 21 Chelsea, for $138.9 million or $661,428 per unit. The purchase of the 14 story building included 1,600 square feet of retail and a 152 space parking garage.
 
The third acquisition was 95 Wall Street, a 507 unit, in the financial district one block east of its building at 10 Hanover Square. The REIT paid $328.9 million, or $648,717 per unit. Once again this purchase included the purchase of 7,526 square feet of retail space and a 97 space parking garage.
 
At the end of last year, Equity Residential purchased the 113 unit residential rental building at 175 Kent Avenue in the hip Williamsburg section of Brooklyn for approximately $76 million or $672,566 per unit.
 
I may not have a crystal ball, nevertheless, it looks like the REITs, local and international investors from around the world have a couple of things in common. They all have a desire to own real estate in New York City, especially residential rental properties. It seems that paying a price of nearly $1 million for a residential unit an increase of nearly double the price paid over twelve months is not having an affect on the investment sales market. With interest rates at record lows, coupled with the availability of financing from Wall Street, Insurance companies, Fannie Mae & Freddie Mac, and commercial and savings banks, the outlook is very bright for this asset class.

____________________________________________

My Experience at One 57 (157 West 57th Street)

Here are a number properties which I’ll be very excited to report on in coming months:

150 e 72nd
737 park
The Drake hotel site
400 Park Avenue (new Toll Brothers site)
150 Charles
71 Charles
79th and 3rd
18 gram park later 2012

However, my new development monthly update will be one building in February, as I have plenty to share with you.  I have been trying to get access to Extell’s new project, One 57, for about 6 weeks.  The sales office opened to little fanfare, and imagine my surprise to hear today that One 57 is already well over 30% sold out already.  There are only two (2) two-bedrooms remaining in the building, as above the 56th floor, there are only 1-2 units per floor.  A total of 90 units in the building- which means that 30 units are in contract.  I am flabbergasted.  The full floor units, such as the 84th floor, have over 6000sf and are asking $57,000,000.   So nearly $10,000 per square foot. 

Sales Office for One 57

I’ll spend some of my main monthly post speaking about this more in depth- but what still bowls me over are views.  Drop dead gorgeous views of Central Park.  They never get old.  And this building has the most stunning views of the park- nearly dead center looking North. 

I will remind you that I spent more than a year working on One Madison Park, which shares much in common with One 57.  I frankly think that this will end up being one of the most successful developments in the history of New York City.  There are multiple $60mm units in contract, with many units in contract being combined- all with interior by Thomas Juul-Hansen, who designed all the interiors for Jean Georges’ restaurants- and the One Madison Park interiors, in conjunction with Christian Portzamparc.  Smallbone kitchens, with exquisite marble, or lacquer cabinets- with beautiful walnut interiors in the kitchen drawers and cabinets.  Creative stools that are seamless and built into the kitchen island, everything venting to the outside (along with washer/dryers).  Powder rooms of green onyx, rare stone materials- there is something of the timeless in every design, along with something of the modern.  They really carved out a rare balance. 

Now the sales office won’t admit it- and I’m not sure of this myself- but Extell owns a site to the West of this building, which likely will become another similar tower- will it be 1000 feet in the air?  Unsure.  But those purchasing here should assume their Western view will be obstructed for 20 of the 360 degrees.  It’s a tiny nuisance.  A blip in an otherwise insanely amazing view. 

My main question is whether it would be worth buying the Penthouse triplex downtown at One Madison Park for $30-40mm as a long term investment, or buying a mid-building unit, of similar height- for $50-60mm.  Is the Park Hyatt level of concierge and amenity a better deal living on 57th than living in a 65-unit building on 23rd and madison? 

My sense is that this has much more international appeal- though the views will be similarly spectacular- and I have seen them- it’s just wow beyond wow.

The sales office shows a 3-minute video of Portzamparc’s inspiration, of a cloud turning into a  waterfall – that alone created a perfect mood for a buyer- the sales office says their conversion rate is extraordinarily high, that many new yorkers are purchasing there- and I believe that have put together a dream team to make this a massive success.

Now, all you need is the time to see it and a $8mm for the lowest priced two-bedroom (somewhere around the 40th floor).  She called it the gem in the nicest neighborhood.  How cute.

Another Brown Harris Stevens Award

Recognize one of these guys?

This is a fun award to win.

-Scott

“So You’re Priced Out” Comments

In case you missed it, the New York Times did a piece called “So You’re Priced Out.  Now What?”

They showed areas in which prices have stayed strong, or gone up signficantly in recent years, and offered suggestions of areas which might be more afforable.  The premise of the article is that there is an analogue to each area. 

Side-by-Side Neighborhood Comparisons

 Upper West Side = Prospect Heights

Lower East Side = Greenpoint

Carroll Gardens = Crown Heights

SoHo = Ladies’ Mile

Hell’s Kitchen = Long Island City

 

This actually is a fun concept.  If you’ve ever walked in downtown Brooklyn, sometimes it feels like you could be anywhere in the united states.  I’ve been in downtown Louisville, and it feels pretty similar in the epicenter of each downtown.  Breaking out these neighborhoods of New York City in terms of look and feel is true. 

 

Putting price aside, Brooklyn Heights and the West Village feel very similar in look, but in other ways remind me of the Upper West Side- specifically a “vibe” which might be hard to articulate in a blog post without more time.  That said, for the “vibe” reason, you could easily be drawn to any of these locations.  And if you are looking to recreate a vibe in a different location with a lower price point, these comparisons are apt, to a degree.  The best of these is probably the Prospect Heights to Upper West Side.  The proximity to parks, building composition, general feeling of green, and from multiple conversations I’ve had with clients- at this point the neighborhoods feel very similar.  The worst of these is probably the SoHo/Ladies’ Mile.  This strip of 6th avenue in Chelsea is so commercial, it has none of the cobblestone feel of SoHo.  Perhaps they mean to compare the walking mall aspect of each- but I would argue no one is looking to live in SoHo, or the Ladies’ Mile for that matter, for that reason- are they?  The buildings are similar in some ways, with some manufacturing, specifically garments, that have an historical tie. 

 

The Hell’s Kitchen/ Long Island City Comparison might draw some ire, considering how far Hell’s Kitchen has come.  Unfortunately, Long Island City isn’t there in terms of services, and depending on where you look, it feels more like Hoboken, or the Upper East Side, in building composition.  It may be more convenient in some ways than Hell’s Kitchen, though!

 

I’m not sure I understand the Carroll Gardens/Crown Heights comparison.  Really?  Has Carroll Gardens gotten that expensive by comparison.  I would urge you to spend a TON of time searching in Carroll Gardens before giving up and trying to find an analogue.

 

The underlying assumption through all of this is noble, in that the author is trying to handicap the next neighborhood to explode.  And for that, I’ll make my bet on Prospect Heights.  Hell’s Kitchen is amazing, and I might advise the Flower District before heading to Long Island, just to be sure.   If it comes down strictly to price, be careful of bidding wars from all the buyers who read this article in Crown Heights.  Bed-Stuy has some gorgeous homes for under $1mm.

 

The Harris Residential Team honored December 2011

Taking a moment to pat ourselves on the back, The Harris Residential Team was honored in the West Side office for most number of deals in December 2011.   I write this at the bottom of each monthly email, but I am honored to represent some of the best clients and families in New York City.  Smart, interesting, hardworking and life-loving folks who inspire me.  To work with them (and you) and also get recognition for doing business is so satisfying.  Thank you for your support- and please let me know how I can continue improving what I’m doing for you and your referrals. 

Best, Scott

Mortgage Rates below 4% again

Sound the alarm!  Rates have been under 4% for a week or two.  

The Horse is Dead. Long Live the Horse

I was writing about the continuing drop through 2011 of rates, but here we are, looking at an important election year, where little to nothing is going to happen in Congress.  Rates are low, owners are refinancing, and if you are a buyer or owner, take a look at the rates.  Shockingly low.  I don’t want to beat a dead horse, but money is so cheap right now, and it may stay this low in 2012, but not forever. 

Some months I have more to write here, but the numbers seem to speak for themselves. 

More next month.   I expect to have more quotes from buyers thrilled to have locked

 in low rates.

NYC Rental Report, Thoughts and Takeaways

Bloomburg’s article about the 4th quarter rentals in New York City was titled, “Manhattan Apartment Rents Jump 9.5% as Would-Be Buyers Hold Off Purchases.” 

First, since the article was forwarded to me by 3 different clients asking for my insight on it, I must say that it resonated with them.  Each person was wondering how this impacted the market, their rental properties, or whether the article actually held water.  I am grateful to be a source of information and confidence for clients.  I will say that I do not entirely agree with the title, and this is another way to toot my horn to the same melody I’ve been playing for a while.

Lagging Just a Bit Behind

My takeaway?  The information in this article is lagging by about a quarter, perhaps more.  

I enjoyed doing this last month, so I think that I will take the article, and parse it paragraph by paragraph.

First Paragraph:

“Manhattan apartment rents jumped 9.5 percent in the fourth quarter as landlords emboldened by increasing demand cut concessions and pushed price increases in what’s traditionally the slowest leasing season.

The median effective rent, or what tenants pay after landlord-sponsored incentives, rose to $3,121 a month from $2,849 a year earlier, according to a report today by appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate. The number of new leases increased 10 percent to 7,942 as competition made tenants quicker to sign deals.”

I agree with this from an on the ground perspective.  There continues to be a lack of inventory on the rental side, and properties are seeing rental increases.  This next paragraph is where I feel it goes a little off the rails: 

“Stricter mortgage-lending standards and weak consumer confidence are limiting home purchases and driving demand for rentals, said Jonathan Miller, president of New York-based Miller Samuel. Manhattan apartment sales fell 12 percent in the fourth quarter from a year earlier as Europe’s debt crisis and sluggish U.S. job growth dimmed buyer appetites, Miller Samuel and Prudential said on Jan. 4.”

As I discussed in my blog about the 4th quarter market reports, I think that the slowdown in the real estate market was overblown by the media.  US job growth and NYC job growth do not move in tandem.  The year-over-year sales numbers are too small a sample size to really reflect what’s going on.  There is little inventory across many swaths of Manhattan, and bidding wars even in Brooklyn.  What my team is seeing on the ground runs counter to this data.  Those who have been on the sidelines seem to be reaching out and looking to take advantage of the low mortgage rates.  In the paragraph, I don’t know that I see such a disconnect. 

“It’s somewhat unprecedented that you have this robust rental market and yet we still have this economy that is not fully recovered,” Miller said in a telephone interview. “It’s because credit remains very tight.”

I don’t believe that the rental market is surging because the credit market remains very tight.   Buyers with good credit and large downpayments, which are a requirement in NYC cooperatives, are getting 75% and 80% Loan-to-value mortgages.  This buyer profile is the norm in these types of purchases.  In a sense, I do not think it is tight credit that is the problem.  If anything, it’s the lack of adjusted expectations from the 2004-2007 lending.  Buyers can get mortgages, but not at 90% loan-to-value.  If you’re buying something over $5mm, you will need to put more than 30% down.  This should not be such a shock to buyers- it’s about risk management.  However, at mortgages under $729,000, I am seeing significant activity, not sluggishness.  What I think is that these numbers are reflective of the July/August/September slowdown, which did take place.  Things quieted down for a tiny stretch, reflective in the CLOSINGS in the 4th quarter.  But this was more of a lull than anything.  

I wanted to review a chart to confirm what psychology I saw.  Mortgage rates essentially dropped all year, ending in some of the lowest in history.  Read this chart if you like.  If anything, buyers finally realize that rates are so low that they may, finally, miss the boat on locking them in on a fair price for an apartment.  Let’s jump down the article:

“The surge in demand meant landlords could raise prices while eliminating incentives for would-be tenants, said Gary Malin, president of New York brokerage Citi Habitats, which also released a report on the rental market today. In 2011, 10 percent of deals brokered by Citi Habitats in 2011 included sweeteners such as a month’s free rent, down from 31 percent the year before.

Manhattan’s apartment vacancy rate at the end of the year was 1.1 percent, down from 1.2 percent in the fourth quarter of 2010, according to Citi Habitats.

‘Because the economy was so up and down, I think certain people put off their buy-side decisions temporarily until they figure out what’s going on,’ Malin said. ‘Maybe you feel more comfortable dating your property rather than marrying it.’ “

I worked for Gary Malin ten years ago, and his firm is terrific at tracking rentals.  However, I do not agree with the conclusion.   While it may be an easy response to draw a direct correlation between high rents and low sales, in 2009, we saw no correlation at all.  We saw low rents and low sales.  That was only 2 years ago, seems that we have already forgotten that it isn’t necessarily the case.  

Psychology has played a bigger role.   Bonus season will be down, but probably not as down as expected.  What I expect to see is a flattening in rents in the first half of the year, as more buyers make the move into 2-3+ bedroom apartment purchases, and frankly- as the rents are so high on one-bedroom units, I am already seeing one-bedroom unit sales inquiries pick up and contracts get signed than this time last year. 

I will keep an eye on this for you.  Have a great month!

4th Quarter Numbers- Pricing vs Absorption Rates

If you missed it, there was a ton of hubbub, brouhaha, ado, over the 4th quarter numbers for the end of the year. 

I’ll include the quote from the BHS report.  Part one:

“A sharp decline in condo sales brought the overall average and median Manhattan apartment sales price lower over the past year.  The number of condo closings fell 24% from the fourth quarter of 2010, which meant condos accounted for only 40% of all apartment sales.  A year ago, condos were 46% of sales, and since condos are generally more expensive than co-ops, a decline in their share of the market can bring the overall average apartment price lower.  At $1,391,745, the average price for a Manhattan apartment was 3% lower than during 2010’s fourth quarter, while the median price fell 7% to $785,000.  However, looking at co-op and condo prices separately shows us that much of this decline was due to the lower percentage of condo sales.”

Was the Euro the Problem?

Unfortunately, the media expects to have a quarterly pulse of the housing market.  But quarter to quarter is so difficult to really show trends, even year over year.  One new development skews all of the numbers- and in general there is often not enough sample size to make a huge dent.  I’m probably getting a little too deep in the numbers, but often my clients are surprised with how few actual apartments trade on an annual basis- there is certainly more than a 1:1 ratio of brokers to annual apartment sales in New York City.  Which is sad, but not surprising.

Part two:

“The average co-op price of $1,149,203 in the fourth quarter was just 1% lower than a year ago, helped by an 18% increase in the average price for three-bedroom and larger units.”

This is exactly what I am seeing in my business- and probably the most helpful piece of information for buyers.

Part 3:

“ For condos, the average price rose 4% over the past year to $1,825,728 despite the decline in closings, which were led by an 8% gain in the average price of studio apartments.The economic and financial turmoil that began in the late summer led to fewer transactions than a year ago. ”

I don’t know that I agree- certainly the 4th quarter of 2010 saw fewer small apartments sell (studios and 1brs), which was a hangover due to the $8000 buyer credit in early 2010.  That credit skewed 2010, and by comparison skewed the numbers.  What I actually believe is that small apartment sales are still down, but look a little better than a very bad 4th quarter of 2010. 

Part 4:

“Overall, there were 13% fewer closings than in the fourth quarter of 2010, when the threatened expiration of the Bush tax cuts led many high-end owners to sell before the year ended.  While condo sales fell 24% during this time, co-op sales fell by just 4%.”

Do you believe this?  I experienced a little bit of this rush to sell by end of year- but certainly there are those same pressures in any tax environment due to tax implications of closing on one side of the year end or the other.  I think that European pressures were a huge distraction on condo purchases at the end of the year, and that was the main driver, not the tax issues.  I’m assuming that you have read my other posts about foreign buyers driving the condo market. 

Part 5:

“Job growth slowed in both the U.S. and New York City in the second half of 2011.  Through November, 49,300 jobs were added in NYC in 2011, down from 52,700 in the first 11 months of 2010.  The city’s unemployment rate in November was 8.9%, the same level as the beginning of 2011.  While there has been stagnation in hiring recently, New York’s recovery remains well ahead of schedule.  This combined with a relatively low rate of available apartments has led the Manhattan market to continue to outperform the rest of the nation.”

I think this is incredibly significant to factor in.  Primary home buyers are snapping up good cooperative properties across the city- we are seeing buyers come off the sideline.  Job security is up, New Yorkers to a large degree feel the worst has passed, despite what the rest of the country may feel, Case-Shiller Indices, etc.

Absorption Rate is Key

So what really happened in 2011?  The economy improved a bit, sales volume picked up in most parts of the city, but it’s not enough to call it a trend across all of New York City.

I will wait to see the 4th quarter absorption rate, which has not yet come out.  They may be waiting for this lagging info from end of January to be most accurate- I expect that it will show that there are less apartments now than there were, in combination with the trend of more, not less, volume. 

Putting the high end of the market (let’s call this $6mm and up) to the side for a moment, what we are seeing is that pricing was generally not impacted – that is, we didn’t see a strong trend up or down for sales prices.  Mortgage rates have stayed low, inventory is shrinking.  Something will give- and the 4th quarter numbers are not going to reflect this shift.  What I think happened is that a good number of properties closed at the very end of the year, given where Christmas was this year, and things did not get filed in time for 4th quarter reports- the adjusted numbers should show an even to up overall pricing path, with almost no segment of the market being down, really. 

This is good news!  We have something to celebrate now that the holidays have passed.  Rejoice!  Now let’s sell some apartments.  Have a great week, Scott