True Gotham

Don't hate me because I'm busy!

With 9 active properties for sale, 5 properties in contract and 2 pending contracts, these days are quite busy for me and my team.  I can just hear the comments now accusing me of 'broker-speak" and "spin" which is why I was momentarily reluctant to post just how busy I am right now.  But since I never hesitated in the past to report declining prices, increased inventory, or challenging market conditions, here goes...

Buyer traffic over the past two weeks has increased exponentially as if someone has turned on the once dripping Manhattan real estate faucet again.  Of course as always, this is anecdotal but many of the agents whom I meet at property showings are experiencing the same increase in volume over the past couple of weeks.  And it isn't just an increase in traffic volume, but an increase in deal volume as well.  Here are a few things that I am seeing that may be cause for this phenomenon:

• Increased Credit Availability:  Despite all the talk of how no mortgage money is available, several of my buyers and buyers of properties that I am representing are being offered 75% and even 80% financing from banks like Wells Fargo and Chase.
• More Realistic Asking Prices:  Properties that have been adjusted to levels that make more sense based on current market conditions are seeing the most traffic and the greatest number of offers. 
• Reasonable Sellers:  Most sellers to whom I speak these days DO NOT have their heads in the clouds.  They have more reasonable expectations regarding sales prices and are much more willing to price right out of the gate and/or negotiate to a level that gives buyers that perception of value for which they have been looking.
• Savvy Buyers:  Most buyers to whom I speak are very knowledgeable of market inventory including recently sold comps.  If they perceive a property as being priced properly for today's marketplace, they will bid appropriately.  If not, they will bid what they perceive the place is worth with less concern about insulting a seller.

Could it be an Obama induced Dead Cat Bounce? Perhaps, but it is definitely a bounce...in activity that is.

A year ago, shockingly, jpm claimed that they could not do a jumbo mortgage for less than 35% down. For me, at the time, they offered 25% down (as an exception to the new rule... but a nonsensical one given my financials). WFC was able to look at my assets and make an easy decision.

I am not sure how to interpret that... but... for the last year, there was a large difference between wcf and jpmchase in nyc.

My experience with the banks lately is that they seem to be making "exceptions" for a lot of people. I keep hearing that they aren't lending jumbos at competitive rates yet my clients all seem to be "qualifying" for exceptions.

The other interesting factor is that banks like Chase are no longer working with mortgage brokers so any good mortgage broker will first recommend you contact Chase to get their rate and then they will try to beat it. Most will be able to unless you have some incredible personal relationship with Chase.

Thanks for sharing.

I am surprised by the first comment re JPM. We financed 80% with them back in JUne 2008 on a jumbo mortage. Moreover, we had looked at similarly priced proerties throughout the period from 2005 to 2008 and our Chase banker never had an issue with financing 80% subject to underwriting and appraisal, of course. Even now, Chase is one of the few banks we have talked to willing to do 80% LTV on a refinancing, although their rates now are not attractive enough for us to proceed. (Lenders who do have attractive jumbo rates are restricting us to 70% LTV which we cannot hit particularly in light of potential reduced value of property upon appraisal).

Doug, it is good to hear things are more active.

Doug,
It's a shame that you had a moment of reluctance to post because you like any other human being when pounced on will second guess themselves and possibly retreat. It's a shame because you are very knowledgeable and in no way biased. Many bloggers out there(some quite popular) are so obvious in their biased opinions. Knowledgeable? def. But also blinded by emotion and their current real estate situation. I have only read on your blog what is HAPPENING now. Nothing more nothing less. Please continue to keep us updated with your honest reporting. Do not let the hate mailers drown you out because they don't like what they are hearing.

As a seller with reasonable expectations, how do I price right a 2bdr pre-war on the UWS: sale price in 2006 plus 15% for negotiating? What would you recommend as a reference point to base the price on?
My broker says that previous sales data for comps in the building/area code do not apply anymore. Is she right?

Alexander,

I don't think pricing these days is as easy as plugging in any formula. Your broker is indeed correct that most comps don't matter. The key is to find out what similar props are going to contract for and that requires an aggressive broker with excellent relationships.

Good luck.

doug,

It seems as if every time you post, the market has dramatically changed. Its terrible, then its better, then it is wretched, then its exponentially better.
Doesn't ring true to me.

One other thing. Aren't the first 4 months of the year supposed to be exponentially better(even in awful years)than the other months?

Thanks Steve. It was only a"momentary" thought.

Bben,

I don't think we can compare the first 4 months of this year to any other including some of our worst years as we are in unprecedented territory. That said, I often reporton a daily basis and I suppose what you can take from my anecdotes is that there is still no rhyme or reason to the ever-changing and bizarre Manhattan real estate market. It also depends on who you talk to on any given day but I am in fact busier this January than I was last. I'm not drawing any conclusions, just sharing as I always do.

Check out this comment I received privately on this post from a well-known NYC real estate attorney:

Ignore the critics. They report on yesterdays news. I'm a real estate atty in Manhattan and we got over 10 deals sheets each of the last 2 weeks (that's 20 deals). This isn't spin. Volume has returned. I can't comment on price since that is a brokers expertise. Let's hope it continues.

its great info, but Manhattan is a huge market. Nothing goes in straight line, and just look at how many bear rallies stocks had before getting to where we are today.

Its great that Doug is busy, doing deals, and reporting on it, but I think Doug is one of those seasoned and established agents that will see strong business even in slow markets.

This is supposed to be a very active season, and expectations coming in was that it would be dead, like 4th quarter. So deals are happening and that is great, but WHERE are these deals happening at? Down 15%? Down 20%? 25%? More? For over a year, agents fought me that we would even fall this far, that in Manhattan, that was NOT possible.

And why is inventory still rising big time? Lets see how this action comes through, if inventory treks down, if signed contracts rises, and how long it lasts.

In my humble opinion, this is to be expected after a very fast and dramatic 20-25% falloff in prices in about 4-5 months time! Some deals are happening out of fear, and that is when things get volatile. Same with any asset class.

But looking ahead, I dont see any fundamentals that support rising prices or even a stabilization at these levels; and I think rising inventory trends prove this. Sure we may settle for a quarter or two, see good action as prices fell so far so fats, but peak to trough, if we get out of this mess with only 25% declines, it will be a miracle.

And during this time, some will be busy and making great money. Im glad Doug is one of these guys as its well deserved. I think many agents with 5 years and under work experience dont have the experience, the referral base, sell side reach, buy side reach, or clout to get sellers to listen to them on pricing realistically OR to do the type of action reported here.

I hope it continues too, but in the end, macro forces are way too strong a factor to ignore. Many agents ignored them a year ago, and continue to do so today. Others are waking up to this new world. Doug's clients at least get a level of service and consulting that is hard to come by in such confusing times.

Thanks for the thoughtful insight and kind words Noah.