New York Times: Manhattan Buyers’ Market Widens
By Stefanos Chen
Oct. 1, 2018
Manhattan’s luxury apartment sales continued to fall in the third quarter, but now the starter market, which had been more resilient, could be losing momentum as well.
The median sales price fell to $1.1 million, down 4.5 percent, and sales volume fell by more than 11 percent from the same period last year, according to a report from Douglas Elliman. Other real estate agencies reported similar declines in sales volume and price.
That the top of the market remains soft is not surprising — a glut of new condo construction and a lack of urgency from mostly all-cash high-end buyers have hobbled luxury sales for several quarters.
But a sharp increase in inventory of studio and one-bedroom apartments suggests a slowdown of the broader market, said Jonathan Miller, the real estate appraiser who prepared the Elliman report. There was a 21 percent jump in the number of one-bedroom apartments for sale, compared to the same period last year — the most of any category — followed by a 15.5 percent increase in the number of studios on the market.
“Think of it as a correlation with rising mortgage rates,” Mr. Miller said, noting that the entry-level market is more dependent on financing, and climbing rates have more buyers hesitating. About 63 percent of sales under $500,000 in the most recent quarter included financing, he said.
“We’re really seeing hesitancy,” said Diane Ramirez, chief executive of Halstead, which also released a new report. Resales, which make up more than 85 percent of the market, spent an average of 104 days on the market, up 11 percent from the same period last year, she said. She blamed the slowdown over the summer, typically one of the most robust seasons for home sales, on a buildup of inventory across all price points.
Overall inventory rose 23 percent, compared to that of the same period last year, according to a new Corcoran report, making it the eighth straight quarter in which supply was higher than in the previous year.
“Sellers have to be razor-sharp on pricing,” Ms. Ramirez said, or their listings may get lost in the shuffle.
Still, the market is not exactly sputtering. For context, Mr. Miller said, there were 2,987 sales last quarter — about 9.5 percent more than the 10-year average.
“It’s kind of like a reset,” he said, after several years of record price growth and sales.
Even with the slowdown, about 9.1 percent of apartments sold above asking price, when a stable market might have just 5 to 7 percent of units entering a bidding war, he said. (The market peaked in 2015, when 31 percent of listings sold over list price.)
What remains to be seen is how much downward pressure the recent tax overhaul will have on prices in the coming months. Because of limitations placed on local, state and property tax deductions, which are expected to disproportionately affect high-cost housing markets like that of New York, Mr. Miller said he expected some hand-wringing from price-conscious buyers.
“When people start writing checks on their April tax bill, they’re going to see the higher costs,” he said. “It just becomes more visceral.”
https://www.nytimes.com/2018/10/01/realestate/manhattan-buyers-market-widens.html
Wall Street Journal: New Condo Sales Plummet
By Josh Barbanel
Oct. 7, 2018
It is deal time for buyers looking to purchase an apartment in one of New York’s new condominium buildings, many with high ceilings, large windows and a whiff of glamour, brokers said.
As sales of new apartments have stalled this year, many developers are cutting asking prices and agreeing to go even lower—at a pace not seen in years, brokers said.
“Everybody today comes in and expects a discount,” said Ziel Feldman, chairman and founder of HFZ Capital Group, who has half a dozen condo and co-op projects on the market.
The overall market in Manhattan is in a correction, brokers and developers said, as the supply of new apartments is increasing in many neighborhoods. The third quarter is usually a peak period for apartment sales, but new development sales plummeted in this year’s third quarter, down more than 30% compared with the same quarter in the previous three years, according an analysis of sales records by The Wall Street Journal.
Mr. Feldman said many new developments haven’t been priced to the current market. Still, if a building is “unique and competitively priced, you sell very well,” he said.
In more deals, developers are also agreeing to pick up closing costs, including the city and state transfer taxes of 1.825% usually paid by new condo buyers to close a deal, according to brokers and real estate lawyers.
Brokers who bring buyers to some buildings are being offered enhanced commissions of 4%, higher than the standard 3% in the industry.
Discounting is also on the rise. According to figures compiled by listing site StreetEasy.com, the share of listings in new buildings with price cuts of at least 5% has grown steadily during the past five years, to 8.7%, the highest figure since at least 2012.
In Brooklyn, the share of such listings rose sharply this year and reached a peak 12.3%, the highest since at least 2012. The StreetEasy figures count listings in buildings open five years or less, and include some resale listings too.
Though some buildings still report solid sales activity, many buyers are making demands for deep discounts or simply waiting on the sidelines, brokers said.
“Not all buyers appreciate the level of discount they can get today and are hoping prices will drop further,” said Pamela Liebman, president of the Corcoran Group. “We won’t know whether or not they will be proved right or not” for a while, she said.
Vickey Barron, an agent at Compass who has represented developers and buyers, said a lot of the pressure for cuts is coming from agents who are pushing too far. “They don’t know when to stop and some buyers are losing out on an opportunity,” she said.
At 100 Barclay, a large condominium development on the upper floors of a 32-story art deco skyscraper built for New York Telephone Co. in lower Manhattan in 1927, many listings have sold slightly below asking prices. But that discount grew steeper during the past year or so, according to listings on StreetEasy.
The five sales listed in 2018 averaged a discount of more than 10%. A four-bedroom on the 20th floor with large windows, 10-foot-high ceilings and a 30-foot-long living room was listed for $10 million and sold in August for $8.13 million, an 18.7% discount.
A few weeks ago, Extell Development Co. opened model apartments for 1010 Park Avenue, a narrow 16-story building going up on the site of a community house of a landmark church on Park Avenue near East 85th Street. It cut the overall asking prices on the 11 apartments there by 10.4%, according to a filing with the New York state attorney general.
Many in the industry see the slowdown as a healthy shift, especially in the long term. Frances Katzen, a broker with Douglas Elliman, said there was a time when there was “shock and horror” when a developer cut prices, but no longer. “It bodes well for the market,” she said.
https://www.wsj.com/articles/new-condo-sales-plummet-1538931600?ns=prod/accounts-wsj
Wall Street Journal: A Building Boom Pushes NYC Outward
Josh Barbanel
Oct. 28, 2018
New York City is experiencing its biggest wave of new residential development in at least a decade, shifting the city’s center of gravity away from Manhattan’s gleaming towers toward rapidly transforming neighborhoods in the outer boroughs.
The number of new and converted apartments put on the market in Brooklyn last year exceeded those in Manhattan for the first time since 2009. The borough of Queens is set to surpass Brooklyn by 2020 in new projects, according to housing pipeline data from Nancy Packes Data Services, a real-estate data provider.
The surging economy has brought more jobs to New York, and with them, more people looking for affordable places to live. That has triggered investments in many neighborhoods, especially those on major subway lines, long overlooked by developers and young college graduates moving to New York.
Headed East
New apartment construction is increasingly shifting from Manhattan to Brooklyn and Queens.
Many of the apartment buyers and renters are millennials and younger New Yorkers who say they prefer the quality of life in culturally and economically diverse neighborhoods, compared with the bustle of Manhattan’s streets, not to mention their flocks of tourists. Meanwhile, rising rents and gentrification are putting pressure on low-income New Yorkers and intensifying the city’s existing housing crisis.
It is also a boom time for many cities across the U.S. Large metropolitan areas generally attract the most college graduates, but smaller cities are also proving magnets for job seekers. Affluent residents are choosing to stay in urban neighborhoods, driving up housing costs and causing growing pains for once-small cities, like Nashville and Oakland, now reckoning with futures as economic hubs.
Even in Boise, Idaho, with a population less than half that of New York City’s smallest borough, locals bemoan worsening traffic, labor shortages and rising home prices. To adapt to the growth, some cities are redeveloping industrial waterfronts while others pursue programs to keep longtime residents in neighborhoods being eyed by wealthier newcomers.
Last year New York City’s population hit a record 8.6 million, up 5.5% since 2010, according to census figures. The Bronx, Brooklyn and Queens grew at faster rates than Manhattan. A few years ago, nearly half of all apartments coming on the market for the first time in New York City were in Manhattan. This year, that share is projected to fall to 30%.
Kate Hovey Hornsby once thought of herself as a “quintessential Manhattan girl,” she says. She worked in advertising sales, going to party after party to meet with clients. She wore Christian Louboutin heels and lived in a series of small downtown apartments.
“If you are going to live in New York, you have to be in Manhattan,” she would tell friends.
But last year Ms. Hornsby and her husband Scott, both 40 years old, did the once-impossible: They moved into a glass-walled three-bedroom apartment on the 47th floor of a high-rise on the edge of downtown Brooklyn.
For Claire Shin, a charter school principal, the moment of decision came while she was expecting her first child. “The thought of raising babies in Manhattan seems untenable,” she said. In April, she and her husband, Jason Burns, bought a three-bedroom apartment on the 10th floor of a new development on Jackson Avenue in Long Island City.
“I so loved Chelsea and loved the West Village, the High Line and all of those things,” Ms. Shin said. “At this point, I couldn’t love Long Island City more.”
The pressure of development is raising housing costs in many neighborhoods outside Manhattan, said Vishaan Chakrabarti, an architect and founder of PAU, an architecture and planning firm. Mr. Chakrabarti is designing a glass walled office complex to be built inside the hulking redbrick shell of the Domino sugar refinery along the Williamsburg waterfront in Brooklyn.
A list of the city’s 10 fastest-developing neighborhoods, ranked by the number of units to be completed by 2020, includes only one in Manhattan—the Lower East Side—according to a study by Localize.city, which has created a tool that maps development sites and shows various details about every individual address in New York.
Long Island City, a formerly industrial area near the waterfront that has sprouted glass towers near elevated train lines, tops the list with nearly 6,400 apartments, followed by Williamsburg’s waterfront district. Bushwick, Bedford-Stuyvesant and Crown Heights are all on the list.
Manhattan still has more than half of all jobs in New York City and a far larger share of high-paying jobs. But employment is growing faster in the other boroughs, mainly with smaller firms and particularly in creative fields like media and advertising. Developers are now betting on new office developments, which are going up in Brooklyn and Queens for the first time in nearly two decades.
In the South Bronx, Madison Realty Capital is completing work on an office complex in a former commercial bakery that is looking to compete for tenants ranging from businesses to nonprofits and government agencies getting priced out elsewhere.
“We started to see tenants being displaced” from other markets because of rising rents,” said Josh Zegen, managing partner and co-founder of Madison Realty Capital. “That was the genesis of this idea.”
Many renters in the newly popular neighborhoods are less concerned about the character of a neighborhood than the ease of subway access to Manhattan and a building’s amenities, said Nancy Packes, a residential marketing consultant.
At one downtown Brooklyn tower, she found that two-bedroom penthouses, which rent for $6,600 and up, attracted renters with household incomes far above the minimum required and averaging about $350,000 a year. In half of those apartments, the income came from a single earner, Ms. Packes said.
More than 20,900 apartments are due to come on the market in 2018, the most since at least 2008. That number is due to rise further in 2019, after which a long-term building boom shows signs of slowing down.
Major Manhattan-centered developers like Extell Development Co., Tishman Speyer and the Durst Organization, have begun building apartments in other boroughs, looking to capitalize on the vibe of Brooklyn and the industrial grit near the Queens waterfront.
“The numbers just don’t pencil out in Manhattan, especially for rentals. Nobody can afford to build there,” said Gary Barnett, the president of Extell, which is best known for building soaring glass residential towers on what has become known as “Billionaire’s Row” in Midtown.
https://www.wsj.com/articles/a-building-boom-pushes-new-york-city-outward-1540742400