Friday, September 23, 2005

More News from the Open House Front

More slow open houses as reported by the Property Grunt:

"Turnout at the Grunt’s open houses has been lower than turn out at a Pro FEMA rally in New Orleans. Ok. That was bad. But you get my drift.

. . .

This is week two of the open house drought and in a previous entry I stated my concern and hoped that this was fluke but it doesn’t look like it. I have heard from one broker who was previewing the open houses in that area that turnout has been low. One of the few buyers who came by made the observation from looking at the major real estate brokerages that there has been more inventory and prices have not risen."

Link:
Property Grunt Status Report

Has the Housing Bubble Been Good to Us?

The New York Times questions whether the housing bubble has really been all that good even for those who bought before the explosion in prices:

"Now that home prices in some markets are showing signs of moderating, lamentations are rising from all sides about the many bad things that may happen as a result. . . .

Unfortunately, all of this hand-wringing tends to distract from the essential truth about soaring home prices, which is that they are a bad thing. . . .

What's so bad about skyrocketing home prices? Almost everything. First, they make life awfully difficult for people who aren't already homeowners and do little for people who are, because selling one inflated house only to buy another affords little profit.

It's true that mounting home equity makes for a nice piggy bank, but it probably also suppresses other kinds of saving and encourages excessive debt. . . .

Sky-high home prices also divert too much capital into home building from potentially more productive uses. And these prices fuel risky, not especially useful speculation in residential real estate. . . .

Finally, wouldn't it be better for society, and safer for our financial system, if people could buy a home without resorting to the kinds of loans - with deferred amortization, for example, or scant down payments - that are risky for borrowers and lenders alike? . . .

My sense, though, is that home prices appear determined to fall, at least where they are most inflated. And having them fall sooner imposes lower costs than having them fall later, while delivering immediate benefits."

Link:
Pop Goes The Bubble

Sorry for the Absence

It's been a busy week.

I will try to catch up on soem recent news with some posting today.

Thanks for reading.

Peer

Wednesday, September 14, 2005

More Anecdotal Evidence of a Manhattan Slowdown

The Property Grunt (NY broker/blogger) on this past weekend's open houses:

"Last Sunday’s open houses were abysmal. Barely anyone showed up. Those that did showed little to no interest in the apartments. And don't bother asking about offers.

The anxiety that has racked buyers and tightened their chests everytime they look at the New York Times real estate section has now been replaced with a cold steely intensity of awareness that the market is slowly turning in their favor with more inventory being put on the market and with the current state of interest rates.
. . .
This seller's market has forced buyers to experience the phenomenon known as BOHICA.(Bend Over Here It Comes Again)which comes in the form of overpriced apartments and bidding wars. A year or two ago it was not uncommon for sellers to raise their prices during a bidding to see who would be the last buyer standing. And some buyers would accept the new price changes. If a seller were to do try that now, a buyer would respond by putting their foot up the seller's ass since buyers are more likely to avoid BOHICA."

Status Report from the Open House Front

Views on Manhattan Prices

Curbed recently had some responses from its readers on whether or not you should buy a Manhattan apartment now, or wait on the sidelines in anticipation of a market correction. Here are samples from both sides.

The bear case:

". . .any rational person knows instinctively that, right now, the market is stretching toward its topside and the growth curves will average themselves out to something rational.

Extraordinary value growth cannot be sustained, especially not in the local market where luxury condos are the new tulip bulbs.
. . .
Luxury condos, meanwhile, will start ending up on the foreclosure market; luxury rentals will find themselves hitting lean times. They either must lower their prices (which is about to start happening) or risk the loss of the entire investment through bankruptcy or foreclosure. Since a lot of people will have no room to adjust their price expectations, they will perish in the market. Blood in the streets. You can then start the newest iteration of Curbed, called FuckedProperty.com."

The bull case:

"The benefit of owning your home is its an asset you can live in it, both in up or down markets; better yet, when times are good, you can borrow against it. As long as you have the personal discipline to manage your finances, the cycles of the market are completely irrelevant to a home owner. . . .

So while you've been waiting to time the market and guess the right entry point, I've been building equity in my homes and increasing my equity base. . . .But let's say your pessimism holds true, . . .then supply may indeed catch up to demand with buyers caught off guard (although you weren't), resulting in declining value of owners' home equity values today. But then it's safe for me to assume that the market, in general, has become cheaper, and I'm in a position to replace my assets and reshuffle my portfolio (replace my cheaper home with a significantly larger also cheaper home, or downsize my exposure and replace my home with a smaller place, or just refinance my mortgages), to take advantage of the next market cycle."

And this from the Proerty Grunt:

"I am already meeting buyers who are taking the I will look but in no rush stance. On my end there have couple of price reductions on some listings and I am noticing overall that the market is starting to slow down.

However this could all be premature since the fed hasn't made a move since Katrina. But until Greenspan takes some type of action I would not be surprised if more buyers become gun shy."

Staying on the Sidelines

Please feel free to (in fact you are encouraged to) leave your own thoughts in the comments section here.

Friday, September 09, 2005

Manhattan Apartment Prices Drop

I saw the following update on the market for New York apratments yesterday from Halstead(the real estate broker) by way of Curbed.com. Curbed paraphrases this report:

"Key findings: apartments in Manhattan sold for an average of $1.145 million, 14% higher than a year ago, while median prices jumped 12% to $725,000. And loft prices set a new record in August, hitting $966 per square foot, 25% above a year ago."

Well, duh. Did anyone doubt we would see a year-over-year price increase. Butoff the top of my head those numbers seemed to show a downward trend. Before I could start tracking the past quarters myself the New York Post beat me to it. The Post writes:

"The average price of a Manhattan apartment has dropped from $1.332 million in June to $1.145 million by the end of August — more than 14 percent, according to the latest monthly report by the Halstead real-estate company.

Likewise, the median price of the Big Apple's condos and co-ops has dipped from a high of $831,250 in June to $725,000 in August, a 12 percent drop.

While the summer months have traditionally been a slow time for real estate, this year's numbers have taken an exceptionally heavy nosedive.

. . .

In June, when the average sale price for a Manhattan apartment hit $1.3 million, it was a 30 percent increase over the previous year. But the August average price of $1.145 million is less than half the yearly upswing — about 14 percent — from $1.001 million in August 2004."

A broker says: "'At this point, I'm telling them not to panic. But it's getting close to the point where I'm telling them they have to be flexible,' a term that sellers across the country have not had to focus on too seriously.

But things are changing in Manhattan, as inventory of available property continues to creep higher."

Link:

Condo Uh-Oh