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Photograph by Jake Dobkin
The big real estate brokerages released their 2008 4th quarter reports, and here's how the NY Times put it: "For those New Yorkers who wondered what the Manhattan real estate market might be like without the ever-rising bonuses of Wall Street’s elite, the answer is now emerging: an abrupt decline in transactions, tottering prices and buyers who are still looking but unwilling to sign a contract. "
The Real Deal gives some context, "For the first time in 10 years -- with the exception of a brief blip in 2006 -- the median price of resale apartments fell from the prior year quarter," according to Jonathan Miller, of real estate appraisal firm Miller Samuel, who prepared Prudential Douglas Elliman's Manhattan market report. He also told the Real Deal that market condition "were actually even worse than the reports show," because the number of signed contracts (not counted in the quarterlies) "has declined anywhere between 35 and 75 percent from the same period last year." Plus, contract prices showed a 20% decline last quarter. Miller told the Wall Street Journal, "The Manhattan market ... has clearly entered a new period of lower sales activity and overall declines in prices."
Streeteasy.com gave a bunch of grim stats to the Daily News: Resale prices are falling for condos (-9.5%) and co-ops (-5.2%), price cuts skyrocketed, and there were almost 20% more listings last quarter. Plus:
- "These neighborhoods saw the most price cuts: Beekman (50.6% of listings cut prices), Manhattan Valley (45.7%), East Village (43.1%), Central Park South (41.9%), SoHo (41.7%)."
- "These neighborhoods saw the deepest price cuts: Clinton (10.93% was the average discount), Tribeca (10.83%), Flatiron (10.35%), Central Harlem (8.58%), East Harlem (9.98%)"
Curbed breaks out details from the brokerages' reports. One thing to keep in mind: The average price of Manhattan sales is still pretty high and steady (around $1.5 million), thanks to high-end new luxury development sales.
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"But President Obama, I thought parties never end," said the developer.
I don't think you're going to see a ton of upside-down mortgages like in FL and CA, but the prices really were too high. I mean come on, you had people regularly asking $1+ million for studios in their "high-end" buildings.
Right, blame Obama for the economy he's inheriting.
The fact that new homes aren't being purchased due to the absence of bonuses is one thing. What about all the folks who bought LAST YEAR with their bonuses who are unable to make payments now? What will they do with their homes? When they start to unwind their homes at discount, watch the impact then!
Oh, I don't blame Obama in the least. That up there was the weak excuse the developers are going to use when they expect him to give them a bailout too.
Sorry but I would take a look at the early 90's NYC real estate - that "tanked."
Bubbles pop. Prices were stupid.
Props to Gothamist for providing a solid and concise summary.
I think that commentator was more or less mocking the Obamaholics and developers who drank the government's Kool-Aid. The idea by both parties that everyone should own a home was absurd. Obama wasn't the root cause of the problem, but he wasn't the solution. As a Senator, did he ever understand the collusion and inherent hazard with Fannie, Freddie, and Ginnie? That was part of his responsibility along with every other Senator and Congressman. They all let us down by promoting a secondary securitization market. So I do blame Obama, partly.
And the party is over. Wait until foreign investors pull out of US assets and all the ARMs reset to higher rates. Not to mention even people in 30 year fixed rates are going to struggle to make payments if they're unemployed.
These Wall St douchebags and their ill-gotten gains drove-up NYC RE prices to astronomically ridiculous heights, pricing even upper middle class people completely out of the market not to mention the working middle class.
Having them out of the picture now is like pulling a painful thorn from your azz: you should feel nothing but RELIEF!!!!!!!!!
Prices can't be driven up artifically unless there's free money to use. And that's what the moral hazard of Fannie, Freddie, and Ginnie created---a secondary market and easy money.
Again, it's not Wall Street's fault. It's the law of unintended consequences at work. Government should just stay the fuck out of helping us because it just creates bigger holes.
I work in real estate and I must say that this is some troubling information, however, I am confident that the market will recover within the next year. There are several real estate companies out there that are finding new ways to reach people. For example, this company called Taylor Morrison has a really good contest people can enter where they can win a dream vacation, here's a link if anyone is interested, http://snurl.com/9ht46.