At The Core | Post Election Market Predictions

The election has come and gone … and whichever side you voted on, whatever your politics, what is for certain is that the NYC real estate market will benefit. No, this is not because of Donald Trump’s real estate endeavors; it’s merely because the uncertainty of who will lead our nation is gone. The unknown is behind us, and everyone is beginning to process what a President-Elect Trump will mean for our nation, our cities and our industries.   We therefore believe that the relative freezing of the markets that we’ve been experiencing will thaw and that 2017 will experience a pick-up in real estate activity.

Why aren’t we seeing this thaw now? Right away? Many factors come into play. First, the results are very raw on both sides, and it will take a bit of time to truly digest the implications of America’s decision.  Second, the first few weeks and months post-election will provide valuable signals as to how much election rhetoric is likely to translate into presidential policy.   Third, the holidays are-a-knockin’ on our door, with Thanksgiving right around the corner, and then Christmas, Hanukah and the New Year barreling towards shortly thereafter.  Not much activity usually happens during this time, unless there is some looming real estate related tax deadline that punctuates a calendar year end.

We therefore anticipate that it will be in Q1 and Q2 of 2017 that will see our anticipated uptick of transactions, leading to a continued growth of the NYC real estate market. This normalization is set to take place not just in terms of activity, but also in terms of prices, the latter of which have been greatly skewed by the material oversupply of luxury new developments. Their larger than usual market share of overall NYC inventory first put upwards pressure on prices and then had a disproportionate impact on their perceived softening.  Once most of these new developments move through the system and close in 2016, (having been in contract for the last 2-3 years as they came to completion), we believe we’ll have a far more accurate pricing base-line, a correction of sorts, that will allow us better gauge the state of the market.

Re-sales will play a more prominent role, therefore, in setting the overall market dynamic. We believe that their predicted activity will help bridge the growing gap between buyer and seller expectations, a gap that has been greatly exacerbated by luxury new developments, fueling sellers’ unrealistic expectations and leaving bewildered buyers out in the cold.  The more resale properties that close over the course of the next 4-7 months, the faster we can come to a shared buyer and seller narrative as a healthy foundation for future activity.  All in, we believe this will have a positive impact on 2017, especially as it pertains to our 2016 experience.


Ask The Experts | What You Need To Know For 2017

This month, we thought we’d tackle a frequently asked question from both buyers and sellers.

Buyer Question: is now a good time to find a deal or am I better off waiting until the new year?

Answer: This is a more nuanced question than most buyers realize. Options are very different than deals.  If you’re looking to pull the trigger and you haven’t found a property to your liking, then waiting until inventory picks up in the new year is likely a good idea.  You are likely to have more options that might make your heart pitter patter when more sellers decide to finally list.  That said, and here’s the rub: if you’re looking for a real deal, waiting may not be your best option.

Why? First because the new year’s inventory increase is also likely to bring with it competition in the form of new buyers who have chosen to sit out the market until the election and holiday dust settles. This means that those very same properties that might move you to act are likely to be the ones prompting other buyers to act, reducing your likelihood of getting a “deal”. More importantly, however, these new buyers are also likely to consider properties they’ve never before seen and may, themselves, be looking for bargains.  That property that’s been lingering on the market for the last 5 months? That’s the one that you can likely negotiate to its most attractive levels now, when you have less competition and when sellers are really sweating it out.  Trust us: if a seller’s property is 5-6 months old, they are not stress-free. This is not to say that a seller is financially stressed but likely to negotiate in order to sell.

It may be worth your while to revisit properties you’ve seen before but passed on, and burnish your negotiations stamina so you can get the deal moving. Sellers know that this means their properties are unlikely to trade until January or February at this pace, so they may be more willing partners in the transaction.  Remember: finding the property is only a fraction of the battle.  You’re working with a broker partner to help you navigate the entire process and, most importantly, negotiate on your behalf.  Endless research studies have shown that we are our own worst negotiators; don’t let YOU get in your own way! We can sift through the influx of information you are receiving, help you make sense of it all, devise a disciplined purchase strategy and hold your hand when the going gets tough (as it almost always does).

Seller Question: How do I know if I’m holding on to a property that I should consider selling right now? (i.e. What’s selling?)

Answer: If you are thinking of selling, this is what we recommend based on what we’re seeing buyers looking for right now:

Millennials defining demand: studios and 1-bedrooms are moving! If you’re considering listing your studio or 1-bedroom, this may well be the right time as it is the hottest segment and represents the largest buyer base at this time. Most of the demand in this market segment is driven by millennials, most of whom are looking for turnkey apartments. What does this mean for you? If your property is dated or stale, it may be worth investing in a quick renovation and some sprucing up of appliances and finishes to make it move-in ready and effectively woo this demographic. Putting some money into your unit will pay off in terms of fewer days on market and a potentially higher valuation.

Pricing sensitivity for larger footprints: conversely, properties with 2+ bedrooms are currently defined by increased price sensitivity. Unlike the potential bells and whistles that may work for smaller properties, across all larger bedroom counts we’re seeing the themes of price, price and price rule. This is regardless of whether or not your home sits on the market for longer than you’d like. So make sure you do your homework, get a very specific and granular set of comps, price accordingly, and keep track of competitive properties as they emerge.


Monthly Gem | 196 Orchard

This month’s gem finds itself in one of the most dynamic and diverse neighborhoods of NYC: the Lower East Side. It is against this bustling backdrop that 196 Orchard sits.  Our monthly gem is everything you’d expect a building in the neighborhood to be:  sophisticated but in a textured, industrial way, overflowing with grounded luxury.

Designed by Incorporated Architecture and Design, the building is crowned by rooftop gardens and features oversized, dramatic metallic bronze industrial-styled casement windows, surrounded by imported gilded bronze glazed Spanish bricks. The aesthetic pays homage to the neighborhood’s past and its vibrant present, punctuated by an equally lively Equinox gym on the ground floor.

Why did we choose 196 Orchard?   First, we believe that the Lower East Side will be the next Chelsea.  The neighborhood has the unique mixture of grit and glamour, home to a diverse population of young and old, along with city newbies and veterans.  Further, it is well served by public transportation, while also sitting at the intersections of some of the most vibrant communities in the city: the East Village, Nolita, and Chinatown, and a stone’s throw away from Soho and the West Village.  Until now, very few new developments have broken ground here, so we believe this to be a great opportunity to gain a foothold in this up and coming hood.  Further, the varied mix of price points and sizes among its 93 residences make it very appealing for residents and investors, alike.

 


At The Core | Political Uncertainty and Real Estate

What do crashing stock markets and exploding office gossip have in common? They both feed off of and are fueled by uncertainty.  Indeed, today’s political and economic landscapes are both littered with uncertainty stemming from our upcoming presidential election, suspense only exacerbated by the highly polarizing nature of this one.  And what do we know in the absence of the known?  It makes people not want to take any amount of risk.  As uncertainty increases, so does one’s loss aversion.

In terms of real estate, political uncertainty means everyone is holding their breath. The election has become that looming, enormous, ever-present elephant in the room that dampens all activity.  People to the left and right all can’t wait for this election to be over, already, so that they can move on with their lives.  Buyers and sellers, alike, are questioning what will happen to real estate prices after the election and our answer is: “not all that much.”  We believe, especially as it pertains to NYC real estate, though in many ways applying to other vibrant urban centers, three factors are responsible for our answer:

  • First, real estate is local. Despite national indices and headlines, real estate always has and will be local, local, local. It has its own local market, its own local supply and demand dynamic, and its own local, living ecosystem.   This is why implications of the Case-Shiller only have a fractional impact on the reality of NYC real estate. In many ways, particularly in a country as large as ours, one could argue there is no such thing as a national real estate market.
  • Second, real estate is a hard asset. Unlike other “soft” assets that can more easily swayed by regulatory and political trends, real estate generally dances to the beat of its own drum.  It’s rather difficult to pass legislation affecting real estate nation-wide, thereby limiting the potential impact that any one election cycle would have on prices.
  • Lastly, NYC is one of the world’s premier real estate capitals. It is solidly planted on the international stage, buttressed by a diverse array of buyers from across the globe, and therefore buffered from the more dramatic oscillations that other markets may feel based on any one catalyst.

With all this said, there is one thing that uncertainty definitely brings for the savvy decision-maker: opportunity.  When uncertainty diminishes, things go back to normal and the relative paralysis experienced before hand dissolves.  Meaning: if you see an opportunity now, take it! The opportunity to list, the opportunity to purchase, no matter – there is much to gain when you act (armed with information and intelligent research, of course) while others are paralyzed by fear or indecision.  Pockets of arbitrage still exist and they will always be there for those more seasoned among us who recognize and are willing to pounce on them at the right time. Tic toc …


Date Your City | Fall at The New York Botanical Garden

The fall is a wonderful time of year for our city. Leaves-are-a-rustlin’, kids-are-trick-n-treating, and the New York Botanical Garden exhibits are truly exquisite.  Until October 30, you can check out:

  • Scarecrows: From the Heartland to Horror: “Throughout history, scarecrows have been the guardians of gardens. Sculptor and artist Ray Villafane returns to NYBG to create an original installation that explores the evolution of the scarecrow in the U.S., from its everyday role in agriculture to its status as a cultural icon in films and comic books. This art display features vignettes crafted from natural materials and set amidst swamp and marsh in the Garden’s landscape. Explore the detailed display during the day, discover its surprises as it comes to life after 3 p.m. and on Scarecrow Nights.”
  • Giant Pumpkin Weekend: “Monstrous pumpkins from around the country—some weighing in at more than a ton—once again arrive at the Garden, arranged in collaboration with the Great Pumpkin Commonwealth. Meet the growers to learn more about the growing process during Q&A sessions and enjoy photo ops with these giant gourds.”

Monthly Gem | 42 Crosby

This month we feature 42 Crosby, a beauty of a condo project located in cobble-stoned Soho and designed by Anabelle Selldorf’s Selldorf Architects. Noteworthy is that the project received Landmarks Approval by the Landmarks Preservation Commission after several attempts back in 2013. The project will house 10 units total across its 7 stories, and will boast parking spots for a whopping $1 million.  That’s right: you read that correctly.  $1 million for each of its 10 underground parking spaces, as the news was broken by the NYT. Units range from $8.7 million to $25 million asking for the penthouse.  We know you are all ready to investigate, so here are some additional links.


Apple Bites | Mah-Ze-Dahr Bakery

One of the things we love about this city is the never ending entrants to the foodie scene. Never have we been more excited surrounding the opening of Mah-Ze-Dahr Bakery in the West Village.  We were privileged to help the owner locate her first brick and mortar store on Greenwich Avenue.  You should taste her delicious treats, but if you need some more encouragement, see below!

Straight from the NYT:

Umber Ahmad was an investment banker whose specialty was the global expansion of food brands. Tom Colicchio was a client, and they talked food. After Ms. Ahmad treated him to samples of her cakes and cookies she grew up baking with members of her Pakistani family in northern Michigan, he encouraged her to go into the business. Since founding Mah-Ze-Dahr Bakery in 2013, she has been baking in a commercial kitchen with Shelly Barbera, her executive pastry chef and partner, and selling her finely wrought pastries online to consumers as well as to wholesale clients like Jet Blue. And finally … she has a spacious West Village shop, opening Thursday, that’s done in pearl gray with a tufted banquette and marble displays for her lush tarts, cookies, cream puffs, bars, cakes, brioche doughnuts and other sweet and savory items. There’s a back room with a communal table that she plans to use for classes, and a big kitchen downstairs. The name of the company is based on the Urdu word mazedar, meaning “the essence”: Mah-Ze-Dahr Bakery, 28 Greenwich Avenue (10th Street), 212-498-9810, mahzedahrbakery.com.

Eater.com covered her here, Grubstreet covered her here, the NYT raved about her doughnuts here, while Food & Wine named her cheesecake one of the best in America here. I mean, come ON!  Aside from adoring her food, we have a special connection to Umber and her bakery.  Run, don’t walk, to Mah-Ze-Dahr!


Date Your City | New York Film Festival

The New York Film Festival is one of the most popular activities in the fall in NYC, and it’s little wonder as to why.   Some of the most critically acclaimed films from around the world are showcased and often premiered at this event that began back in 1963.

For the first time ever in its 54 year history, a documentary will open the festival: The 13th (as in the 13th amendment) is a race-related documentary directed by Selma director Ava DuVernay and is bound to be a showstopper. The festival runs from September 30th to October 16th out if its main venue at Alice Tully Hall at Lincoln Center (1941 Broadway), along with the Walter Reade Theater (165 W. 65th) and the Elinor Bunin Munroe Film Center (144 W. 65th).

For additional information, check out its official website (http://www.filmlinc.org/nyff2016/) along with the top ten films to see according to Time Out NY.


At The Core | Market Snapshot

The fall is well upon us and we’re finally able to smell crispness in the air, while hearing the pitter patter of buyers’ feet beginning the post-Labor-Day open house journey yet again. It’s time to check in on the market and get a sense of what’s happening.  Noteworthy: September numbers are not in just yet so we’ll be taking a look at August numbers for the most part, coupled with anecdotal observations we’ve seen in September so far.

Inventory:  The inventory story has been front and center for some time now, and the present day is not that different.  As of the writing of this newsletter, inventory is up roughly 17% from last month, and about 15% from this time last year.  That’s the good news. Since 2008 until now, considering all the highs and lows of inventory, we’re right in the middle:  not too much, not too little.  The way in which this is translating on the ground is that there is a healthy flow of transactions unfolding in NYC, with both buyers and sellers calibrating to the new norm.

Sales volume: Activity is definitely picking up, after a gentle downturn that began right before the summer months. That said, properties are taking longer to sell, with the median Days on Market inching up to 72 days, up about 10% on a monthly and annual basis.  Because the sales cycle is stretching out a bit, don’t be surprised if quarter-end sales end up trending lower as the market catches up to a more relaxed market environment.

Coops vs. Condos: One of the more interesting stories emerging right now is the comeback of the co-op. For several years now, condo transactions have overwhelmed co-op transactions due to their inherent flexibility and relative newness.  However, as prices have continued their ascent for over 7 years now, condos have become farther out of reach for many.  It’s no surprise, therefore, that so many co-ops have become a value play, especially for first time home buyers.  In fact, a whopping 65% of co-op transactions occurred under the $1mm mark, versus a mere 25% for condos.  Further, although we often think of co-ops requiring far more cash to buy, just over 38% of co-op transactions were all cash in August vs. 60% for condos.  The world is-a-changin’.

Pricing dynamics:  Of note, in this normalizing market, is the importance of pricing a property correctly.  Whereas only a year ago, more than half of buyers paid over the asking price for their new possession, nowadays, that number has been cut in half.   30% of co-op buyers paid over asking in August, versus 13% of condo buyers.  Why the difference?  It’s because of the concentration of buyers in the sub-million market of co-ops, spurring competition and supporting prices for that small segment of quality jewels.  If you consider the relative efficiency of the condo market as compared to the co-op market, it shouldn’t be too surprising that 37% of condo buyers paid the asking price for their units, versus only 13% for co-ops.  This leaves just over ½ of transactions coming in at below asking prices.

It has never been more important to be diligent about positioning your own property well by having an intelligent and well-researched pricing strategy.


Date Your City | Road to Rio

The road to Rio is well on its way and there is nothing like watching the world’s most decorated athletes compete in their respective sports!  With over 500 athletes competing for #TeamUSA, the Red, White and Blue has already received 3 gold, 5 silver and 4 bronze medals, leading the competing countries in the medal board!  If you don’t want to miss any of the action over the next week and a half, stop by one of the many viewing Olympic parties throughout the city and get in the spirit!  We have the best viewing list here for you!  Go #USA!