M a n h a t t a n M a r k e t R e p o r t
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Are we seeing cracks in the Buyer’s Market? |
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With increasing frequency, I am being asked how the market is doing...more than ever before. And everyone's uncertainty is evident in their attentiveness to my response. It makes me laugh as it probably means no one was really listening to me before.
It is difficult to answer this broadly, as everyone's circumstances are unique; however, here are my thoughts on where we are.
This could be the beginnings of a sentiment change for sellers. The overwhelming negative news for them has been so one-sided that recent hints of more positive news could strengthen their resolve to see this through. Until now though, the only positive had been the super expensive rental market which has buffered the downward slide of pricing. But now, as you can see in this excerpt (below 11/25/22) from David E. Rovella of Bloomberg, the narrative may be changing.
"Beneath the surface of a Wall Street still crowded with bears, some money managers are reacting to the latest signs that a “Fed pivot” has finally arrived (as opposed to all the other times) by renewing bullish bets. As the central bank ties itself in knots trying to land the plane without cratering the runway, investors more worried about interest rates than unemployed Americans are starting to see some light at the end of their tunnel. This optimism is showing up across a range of assets. A rush to corporate credit is favoring the riskier edges of the market, with junk bonds drawing their biggest passive inflows on record. Equity exposure among quants has turned positive and that of active fund managers is back near long-term averages. The inflation bid is crumbling, with the dollar heading for its steepest monthly decline since 2009 and benchmark Treasury yields down 30 basis points in November. Faith in the Fed restored, investors ended the week with the S&P 500 on course for a second monthly advance. Even Europe’s beleaguered equity index has gained for six consecutive weeks."
Even if these new green shoots are merely data points for some to craft a conflicting opinion, it will be the precise narrative sellers will grasp onto. This is still indeed “a moment in time”, a short opportunity when everything is still stacked in the buyer’s favor…but, as always, it will be short and it will pass.
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"Contract volume stabilized due to seasonal factors, but as fear fades from the market, it's not leading to excitement. Instead, the intersecting trends suggest a market quagmire ahead until seasonal forces or macro issues lead the way." Courtesy UrbanDigs
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Of course there will be those who disagree, while mistakenly (Ha!) comparing us to the rest of the country. However, throughout my 24 years career, I have found that Manhattan is often counter-cyclical to the to what happens elsewhere.
These are the highlights as I see them:
- Prices have eased and may ease a bit more. In the coming months though, that downward slide will stop, as competition will come back. Timing the absolute “bottom” of the market is impossible. Manhattan is notorious for having short windows of true buyer leverage and then in the blink-of-an-eye it's gone. We're in one of those moments right now, as the bottom is already forming.
- Competition is virtually non-existent, except for very special properties, a very good position to be in when trying to buy. My opinion has always been that the biggest obstacle for buyers entering our marketplace is competition*, more so than price.
- Interest rates have virtually doubled since the beginning of the year, making financing a property substantially more expensive (approx. 40% more than at the beginning of the year). This, along with inflation and sentiment have drastically slowed the marketplace. So let's touch on each of these points: Interest rates are higher than before, but not out of control; it's just not what we’ve been used to and they will moderate. You can tackle this by buying when there is less competition* and refinancing later. It is also important to note that there are alternative financing options (ARMs) that provide lower rates. Inflation is moderating and has begun a downward trajectory. Sentiment, perhaps the most important, will materially improve as we come out of Winter. People will have become accustomed to (and accept) the idea of higher interest rates. They will realize that a high 2 to 3.0 interest rate environment may never ever come back. So if purchasing is a goal, they just need to jump in and they will. And once one does, everybody follows = FOMO.
- As we mount the cyclical slow part of the year on top of all the prior factors, the market will be sluggish until late January, when people reawaken. A momentum will slowly emerge which is likely to build substantially as we hit Spring, when I expect the marketplace to be extremely busy and competitive.
- Historically, periods of extreme slow activity, like we are in right now, have always been followed by periods of overwhelmingly robust deal volume. A colleague described this period as "a buyer's market with no buyers." This is Utopia for someone seeking to secure a home.
- Manhattan is, by far, more of a “need housing” market than a discretionary market. Consequently, when deal volume slows, it is simply piles up and gets unleashed later; that impact will most certainly be this Spring.
- By Spring, people will become accustomed to the dynamics of higher interest rates and realize that they simply “have to move”, whether it be because they have kids, their kids are changing schools or even leaving the house (downsizing), people get new jobs, get married, get divorced etc….life happens.
Objectively, the marketplace has slowed substantially; it’s a buyer’s market at this moment in time (a rare dynamic in Manhattan). Prices have come down 5-10% since the beginning of the year. And they may come down a bit more, another 2-3%; but we do not anticipate much further than that. Limited inventory, especially the pipeline for for new development, will serve to resist any drastic drop in valuations. Ironically, the insanely high rental market has served to further buffer greater declines in the sale market, as that alternative is simply too expensive to maneuver.
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Market pulse is the ratio between pending sales (a measure of demand) and Supply. An increase indicates a strengthening market. A decrease indicates a weakening market. (CLICK CHART ABOVE). - Chart Courtesy UrbanDigs
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How we got here:
Post-covid the market went crazy in 2021; deal volume was at a level we have never ever seen and are not likely to see again. Entering 2022 the market was still running hot; there was moderate inventory; sub-3% (and/or hovering around 3%) interest rates and palpable demand. However, once the war broke out in Ukraine, we simultaneously begun to see a material move upward in rates. These factors combined to create a last minute scramble for deals; however, by late-May and early June, that had all changed...people were checking out. It was exacerbated by the seasonal summer slowdown and the absolute exhaustion of all of the aforementioned news. People were sick and tired of everything and most eagerly jumped into their summer plans to forget about real estate for the summer…except for the rental market, which hit its peak in July. That market has also eased A BIT since, but is anticipated again to be off the charts come Spring.
Although there were hopes of a substantial rebound this Fall, it never materialized to the level hoped for. Deal volume has still exceeded the Fall of 2019 (our last “normal” year with which to compare it to). What has happened is a drastic “relative” change from the copious deal volume we experienced in 2021…the result has been very poor sentiment.
Below is a video link which will further help paint the picture; it is from UrbanDigs. Noah and John are two of the very best and objective data analyst who are highly respected by our industry. Click here. Feel free to watch it in its entirety (approx 10 min), but if you are limited in time scroll to 4:20 and watch the second half of the report.
One last time, we are in a "moment in time" where many factors are converging to create this buyer's market. Your circumstances will be unique and, as you know, I am always around to chat.
As you know, I always say two things: 1) Anyone interested in buying or selling, should be rolling up their sleeves to determine whether the time is right to sell or if there's a home/investment property out there for them; and 2) Who represents you matters…your best investment is often in the broker you choose; find someone with experience, who you feel you can trust.
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Welcome to CitySnap, Manhattan’s the most comprehensive search engine for residential real estate. Where the information is actually REAL and provided by the original sources. Join me!
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* M A N H A T T A N - M A R K E T N E W S *
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* H A M P T O N S - M A R K E T N E W S *
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Similar to the response Manhattan has had to all of the economic factors, there was an easing of activity early in the year, which has precipitously accelerated in this second half. The primary challenge though, and what has slowed the pace of sales, has been persistent low inventory, likely the worst in decades. Regardless, demand remains strong among all price sectors. There is still strong interest in the "buyer's pool," an across all price points, however the available inventory levels are the lowest in decades.
One thing to note is that the reporting of 3rd quarter results is incomplete. Ironically there was a data breach in early September on the Suffolk County Government’s computer network, meaning many deals have yet to be recorded. Likewise, it has delayed numerous scheduled closings due to title search issues. Another factor, particularly in the luxury sector, which is missing are the “off-market” deals. It may take months for the accumulation of these transactions to all get through the system, so that we have an even more accurate view as to what has transpired.
Hamptons' & North Fork 3rd Quarter (2022): click here
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As a buyer, you need to know how to identify the right opportunity for you and when it makes sense to jump in...or not. Everyone's circumstances are unique. Like Manhattan, one needs good representation to successfully maneuver the nuances that exist in this unique marketplace. Let me know if you need help.
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A weekly podcast on real estate in the tri-state area.
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* MORTGAGE & INTEREST RATES * |
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Courtesy: Wells Fargo as of 11/29/2022 @ 10:44am EST |
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Chart Courtesy: Wells Fargo |
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"Purchasing Power"
What a difference 6 months has made.
Example below reflects the difference in purchasing power between:
3% vs. 6%
$1M borrowed at 3% = $4,216/month
$1M borrowed at 6% = $5,996/month
That is a difference of $1,780/month or $21,360/year
Alternatively, we could look at it this way:
At 3%, $4,216/month will afford you a $1,000,000 mortgage.
At 6%, $4,216/month only affords you a $703,200 mortgage.
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* Most Recent MARKET REPORTS * |
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The Latest Market Reports - Sales:
Second-Half 2021 Brooklyn Townhouse Report: click here
Other Markets:
Hamptons' & North Fork 3rd Quarter (2022): click here
Hoboken/Jersey City 3rd Quarter (2022): click here
Miami's Luxury Condo Report 3rd Quarter: click here
Interactive Rent vs. Buy Calculator:
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These are great local resources, especially at times like these. Here are some of the best and most comprehensive neighborhood blogs that are helping to keep us informed. Click on each. |
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With Patch you can choose New York City; however, they also have more concentrated areas categorized as follows: Central Park, Upper West Side, Upper East Side, Midtown-Hell's Kitchen, Harlem, Astoria-Long Island City, Chelsea, Gramercy-Murray Hill, West Village and East Village.
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Edward Hopper’s
New York
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"Hopper is here! The Whitney Museum will present the first exhibition to explore Edward Hopper's life and work in New York. The city served as the subject, setting, and inspiration for so many of the artist's most celebrated and persistently vexing pictures.
NYC was the subject, setting, and inspiration for so many of Edward Hopper's most celebrated artworks. Edward Hopper's New York will look at the artist's unique relationship to the American city, he said, "I know best and like most."
Experience some of Hopper’s most iconic city pictures alongside several lesser-known yet critically important works through March 5, 2023." Learn more.
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The Hottest Restaurants
Open Right Now
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Food from La Chilaqueria, one of the more unusual restaurants in Manhattan for its variety.
Luke Fortney/Eater NY
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Eater's Heat Map (click below) - Some of the Hottest Restaurants open right now:
Eater editors get asked one question more than any other: Where should I eat right now? Here, we’ve put together a map of the latest Manhattan debuts drawing NYC’s dining obsessives.
New to the list in November: La Chilaqueria, a little cafe serving dozens of chilaquiles — a rarity in Manhattan; Lord’s, the sophomore restaurant from the Dame team, and a revived luncheonette in the former Eisenberg’s space, now called S&P.
Health experts consider dining out to be a high-risk activity for the unvaccinated; it may pose a risk for the vaccinated, especially in areas with substantial COVID transmission.
For more New York dining recommendations, check out the new hotspots in Brooklyn and Queens.
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Discover something delicious at the 92Y
Cook along with chef Rob Rosenthal as he shows you how to create delicious, wholesome, vegetable-forward dishes from Greece, Israel, Italy, and beyond.
Cookbook Author, Culinary Journalist and Food Humorist©, Rob is a Manhattan born man-about- town who writes, produces and hosts programs about food. I highly recommend his new book for Dads like myself. There is a new kind of dad, and he's doing far more domestic duty than at any time in history, including cooking. Although it's written with a sense of humor, this book is a serious resource for dads and anyone else interested in upping their game to make great tasting foo d bat home, even if they have never used a chef's knife or a roasting pan before.
Upcoming Courses include:
Note: These are live, virtual courses hosted by Roundtable, which include interactive opportunities and post-course recordings available for all course participants.
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Essential Spices
Monday, January 9th, 6:30 - 8:00 PM EST
Spices fundamentally enhance the flavor of the foods we eat. Rob Rosenthal will walk you through all the spices you need in your pantry and how to use them to create delicious dishes from around the world, right in your own kitchen. Click here.
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The Brilliance of Braising: The Best One-Pot Winter Dishes
Monday, February 6th, 6:30 - 8:00 PM EST
Braising is by far the best cooking method for your meats this winter. Learn to make what will surely be a favorite weeknight dinner for everyone in your household with these easy, inexpensive, and extremely adaptable recipes. Click here.
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Rob is also on iHeart Radio & SPOTIFY with his ALL YOU CAN EAT podcast about delicious food, cooking and luxury travel.
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PRIVATE ONLINE COOKING CLASSES:
Ask Rob about his privates…by which he means that he offers customized cooking lessons to individuals and to groups. You learn, you laugh, and you eat well.
Now that ALL of us need to pitch in when it comes to feeding the family, I suggest picking up some serious tips from Rob. As he says, he went to cooking school so you don't have to. These sessions are fun and literally provide prized skills for upping your game. Enjoy. See Rob's intro here.
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Prepare Your Property for Market with BHS's new program |
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Curate provides you with the ability to prepare your home for sale
with no up-front costs,100% payable at closing.
Services include Cleaning/Decluttering, Renovation, Staging & Design
and more. Contact me and/or click here to learn more.
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New York City * The Hamptons * Palm Beach
Connecticut * Miami
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With Partnering Worldwide, Brown Harris Stevens continues to leverage its very productive relationships with top brokerages nationally and internationally by inviting partners to high- light key properties in their respective markets on BrownHarrisStevens.com, and to feature our important properties on their sites. Learn more.
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With Partnering Worldwide, Brown Harris Stevens continues to leverage its very productive relationships with top brokerages nationally and internationally by inviting partners to high- light key properties in their respective markets on BrownHarrisStevens.com, and to feature our important properties on their sites. Learn more. |
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- Recognized by New York Magazine & Five Star Professional as one of the "most accomplished real estate professionals in New York City."
- Ranked nationally by REAL Trends as one of "America's Best Real Estate Agents" for avg. sales price of $4.350M.
- Recognized member of the 2016 "TOWN Elite" class
- Sold a single family Townhouse faster than any other on the Upper West Side over $10M to date. (StreetEasy)
- Certified Negotiation Expert (CNE)
- Trivia: Won the 2015 New York Times NCAA Basketball Pool.
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Roberto Cabrera
Licensed Associate Real Estate Broker
New York City * The Hamptons * Palm Beach * Miami
rcabrera@bhsusa.com
o: 212-906-0554
m: 917-701-3907
Clubhouse: @cabrera_roberto
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Brown Harris Stevens
1926 Broadway
New York, NY 10023
(917) 701 3907
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Disclaimer: The opinions and content in this newsletter are assembled solely by Roberto Cabrera for informational purposes only and does not constitute financial, tax, investment or legal advice. Everyone has unique circumstances and should consult the their own respective professionals.
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