This sounds familiar

I blame bloggers!  NYC brokers start admitting reality – the real estate market has tanked.

THE incredible shrinking real estate market has arrived right here inManhattan, and now that the first quarter is over, not even the most ebullient broker will be able to dispute it. Now everyone will have no choice but to adjust to a market where buyers aren’t buying and sellers aren’t selling, new developments have stalled and mortgages remain scarce.

Tina Fineberg for The New York Times

The evidence of this decline is likely to arrive later this week when a series of market reports are released, documenting in detail the decline in sales in every type of apartment in every neighborhood.

Last year, the Manhattan real estate market was an $18 billion business. So far this year, sales are off more than 60 percent, according to a preliminary review of first-quarter figures. That is steeper than the year-to-year decline in auto sales in February in the United States.

The drop-off in activity, especially among the most expensive apartments favored by the barons of Wall Street, led to steep drops in city real estate transfer taxes, forced brokerage firms to close offices, led to soaring inventory and left buyers and sellers uncertain about how to proceed.

For now, it seems, the market will be left to people who really need to move and who really need to buy. “If you are going to be there long term, and you need a place to live, go for it — if your time horizon is five or more years,” said Dolly Lenz, a broker at Prudential Douglas Elliman.

Right now, she said, there is a standoff in the market, with buyers expecting huge discounts and sellers resisting. “The buyers and sellers have gotten different memos of what the price should be and no one is budging,” she said.

Michelle Kleier of Gumley Haft Kleier said her firm was still making sales, but of smaller apartments at lower prices than she was used to, typically to first-time home buyers and parents buying apartments for their children.

In the 1980s, a glut of unsold Manhattan apartments in failed projects undermined the market for years. No one knows whether this will be the pattern this time around or whether the market will rebound more quickly if the economy, the stock market and the banks bounce back later this year.

 

9 Comments

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9 responses to “This sounds familiar

  1. SizeBuyer

    What I don’t understand through all of this is the denial that realtors exhibit. Did you guys really think that the prices being paid was justified? Did you guys really think that the prices weren’t going to come crashing down? Do trees grow to the moon in the realtors world?

    I would also like to know how you contained your laughter and composure at the sale prices. Did you guys at 5pm lock the door and have discussions about some of the sale prices and then laugh uncontrolably with oxygen tanks near by?

    • christopherfountain

      Well I’ll admit to scratching my head at some sales over the past 7 years, Size. The best we agents can do for a buyer is advise them as to relative value. This is a better street, this house seems a better (or worse) value than that one, etc. I hope I never sold a house as an investment, but I know that I’ve told clients new to town, “look at a house as a place to raise your family and make your decision based on where you want to do that. I also said, to my regret now, something along the lines of, “if you buy Greenwich real estate and hold it for at least five years, you won’t lose money and you might make some.” I said that because it was true for at least the past 60 years and I had confidence that it would continue to be true. Oops. But just as I wouldn’t fault a stock broker as telling me, “buy stocks for the long run and in the long run you’ll do fine”, I’m not beating myself up too badly. Nobody expects the Spanish Inquisition.
      But I took pride in trying to find the best value – I think most of my peers do too, but I’ve seen sales, often to out-of-town buyers who don’t know better, where either the buyer’s agent was too stupid to know what she was doing (very likely) or was interested in gaining as large a commission as she could and screw the buyer (equally likely). It’s a tough world out there.

  2. SizeBuyer

    I just read an earlier piece and you commented:

    “…but I’m pretty sure now that a lot of them really are as stupid as they appear…”

    I didn’t want to use that word in my post above but since you did then I will say that is the word that I wanted to use:

    change denial with stupidity

  3. SizeBuyer

    Now I am referring to the ones that still don’t get it

  4. anonymous

    Just like personal liquidity/leverage issues of IBers or other financiers reveal which ones understand basic risk and portfolio management, would want disclosure of personal real estate holdings of realtors to quickly figure out which ones have any clue about real estate “investing”…or speculation….anything else is worthless rhetoric

  5. anonymous

    Unless buyer is willing to admit own stupidity, rather absurd that any intelligent buyer accepts any advice on face value and seeks to blame some advisor or broker for mistakes

    Suspect most of buyers of >$10MM apts or houses in Manhattan or Greenwich are from financial industry…supposedly smartest guys in room…if they can’t figure out high-end RE valuation and liquidity risks (fairly simple analysis IMO), I doubt they are much better at their day jobs…natural selection ultimately prevails, esp in bear markets

    • christopherfountain

      Anonymous, I never question a buyer’s ability to afford a house on exactly that principle – if they’re smart enough to work on Wall Street, they’re smart enough to figure out their finances without input from this Philosophy major.
      But don’t overllok the relationship that often develops between a buyer and his agent – finding a house is usually a drawn-out affair, often lasting months, and a trust should build between the two parties. If a buyer’s from New York, doesn’t know Greenwich but trusts his broker, he’s likely to rely on her judgment when she says, “this is a good value”. I’m aware of that and try to honor that trust as, again, do most of my fellows. Some don’t.

  6. SizeBuyer

    CF,

    Good points.

    I do notice that a lot of the “over the top” sales are from out of town buyers which is sad. I believe 100% that both agents know they are sticking it to the buyer. I don’t think I will ever believe differently.

    In my search for a summer home I called a realtor to look at some homes and I mentioned some streets in this town and asked the realtor about location in general and his advice to me was rent in the town for a summer and by september you will know where you want to buy your summer home. BEST ADVICE EVER.

    Point is if you are an “out of towner” you have no clue as to where you should buy so don’t think that you do…come, watch and learn, then make an informed decision.

  7. Walt

    I love this stuff. You real estate schills throw stones at me, but we are cut from the same cloth. You advise clients, as best you can, but when they lose money it’s not your fault. Right? RIGHT? Well I fell the same way, gosh darn it.
    But some how you think I am different? I did the same friggin thing as you commission starved bastards did. I just did it better and got paid a lot more money. But hey, (HAY!!!), thats your problem, not mine. And people that sell alternative investment strategies don’t whine (neigh!!!!) like you losers do.
    Put on the big boy pants and deal with it, for Pete’s Sake!!
    The real estate market in Greenwich will rebound. Just like sales will at FGG. In the mean time, do what I do – play tennis, go to the beach and DRINK!!! But stop the whining, it gives us a bad image.
    Anyway, OFF to TENNIS!!!
    Your Pal,
    Walt