With all the Manhattan talk around here lately, I thought this piece was relevant. Hot off the presses at CNN Money:
Manhattan real estate hits wall
Manhattan real estate may have hit a wall — albeit a very high one. The last half of 2005 saw home prices lag, according to two new reports from Manhattan brokers.
According to Prudential Douglas Elliman, the median sale price for co-ops and condos in Manhattan rose just 1.3 percent in the fourth quarter of 2005, to $760,000. The Corcoran Group found that median sales price declined during the quarter, with a 4 percent slide.
…
The Manhattan slowdown comes on the heels of similar drops in the third quarter in some of the nation’s most expensive real estate markets. Boston and other Bay State areas, many California markets, the Washington D.C. area, and suburban New York counties, all recorded lower or flattening prices, according to National City, a financial holding company.
According to Pamela Liebman, Corcoran’s CEO, the Manhattan market began to soften in the third quarter, owing in part to rising energy costs and media reports of the real estate bubble. (Love it, these guys are blaming the media for the bubble bursting)
Locally, a lot of new inventory came on the market. Some 5,764 residences were in the listing inventory, a huge 52 percent increase over the past year.
…
“We can’t extrapolate national trends from Manhattan markets,” says Richard DeKaser, chief economist for National City Corp. But the turn in Gotham prices does mirror what has happened in many other pricey regions.
It’s evidence of what DeKaser calls “the turning of the housing market.”
The average Boston sale price declined 2 percent in the third quarter of 2005, according to data from National City’s Housing Valuation Analysis. San Francisco real estate fell about 1.2 percent and San Diego 1.5 percent. Washington D.C. rose, but only by about 1.3 percent and Los Angeles went up 1.2 percent during the quarter. Prices in northern New Jersey and in Nassau/Suffolk Counties in New York also fell.
DeKaser expects price increases nationwide to continue to slow. “Demand and market price appreciation peaked sometime this summer. What we’re seeing now is an orderly retreat,” he says.
Caveat Emptor,
Grim
I’ll take Manhattan? Not
so fast, buyers say
It’s not quite a buyer’s market, but Manhattan is close.
Sales of Manhattan apartments dropped and for-sale units piled up in the fourth quarter of 2005, reflecting a cooling of the once-scorching market, even as per-square-foot prices hit a record, according to an influential residential real estate report released on Wednesday.
…
The numbers more or less echo a slate of other real estate reports released this week.
“It’s not a buyer’s market, but we’re close to equilibrium,” said Jonathan Miller, president of real estate appraisal and consultant firm Miller Samuel Inc., and the report’s author.
Buyers in the fourth quarter took longer to commit to a purchase, while the number of apartments for sale soared.
grim
This is going to affect the NNJ market. Most of the affluent markets in NNJ are populated by former Manhattan residents or people who wish they can afford to live Manhattan. Some of the them who are looking in NNJ might look at Manhattan now. Some of those who live in NNJ might want to move back to the city.
I am referring to Short Hills, Millburn, So Orange, Maplewood, Chatham, Madison, Tenafly, Oradell, Fort Lee, Englewood Cliffs, Demarest, Closter……….. And it will also affect JC and Hoboken.
Once it has affected to these affluent markets. It will affect their surrounding areas.
it’s pretty amazing that realtors blame the media for the bubble when no reporters ever even challenge realtor claims.
for example, we keep hearing how wall st bonus season is going to save the market. do reporters ever ask: “how many rich wall streeters don’t already own homes? how many are still looking? do you honestly believe that large numbers of financially aware people are planning on buying right now?”
the next six months are going to be a bloodbath
A great deal of folks are telling me that in the spring the bankers are in force buying homes in the Summit NJ area armed with their bonus money. Now, since they are investment types if this big rebound in the spring does not happen then the Grim man is right on the money.
I am betting on the Grim man.
I’m not so sure I believe investment bankers making six figure bonuses are our next set of greater fools. While I’m sure the money is burning a hole in some pockets, these people aren’t making big bonuses because they are naive investors.
grim
don’t give these investment bankers so much credit. they are overpaid salesman. That’s it.
Who do you think talks ceo’s into doing mergers that usually fail.
there will definitely be activity generated from wall street bonuses. i know a few under 30 guys who’ll be pulling $75-$100k bonuses. these people DO use this money to buy houses. because it’s wall street they buy in the bragging towns like chatham, summit, upper montclair and the like. they have to impress their wall street friends. still, i don’t believe these folks will make up enough of the buying pool to sop up the excess inventory that’s sure to arise on the market come spring. we’ll see i guess.
For those interested, inventory updates will begin again next week. Had some technical issues that prevented me from getting the data over the past few weeks but we’re back on track again.
grim
Grim: i am on the stree, and I can telly you that many of these people already have houses.
Peopl in Jersey must also understand that not everyone on the street makes huge bonus money.
To think there will be hordes of people with bonus money to spend on houses in north Jersey come Spring time is foolish.
I would aslo like to point out again, something which people in NJ have a problem understanding. Many people in NYC are electing to stay there for many reasons, the flight has ended.
Many people I know still belive that hordes of people ar fleeing since 9/11, just not true.
One final note the bankers that do have bonus money to spend on houses, and you can rest assured that many are quite smart and savvy, and are also aware of the houisng slow down, and understand markets etc, do not hink they will be fooled into over paying.
A significant number of visitors to this site come from major financial institutions. A quick look at the log on any given day provides me with a list that reads like the Fortune 500. And it isn’t just a slow drip of traffic from these (and many other incredibly notable institutions), this traffic makes up approximately 20% of this sites daily traffic.
The housing bubble is on the radar at many financial and government institutions. Look at the analyst reports coming out of some of the major investment banks. Many are incredibly bearish on the housing market, and that’s the opinion that’s public. I can just imagine what is being discussed in private.
This is myth and folklore. Just like there will be a wave of rich immigrants from Asia that are going to sweep in and buy California. The Northeast has a wave of big bonus holding investment bankers that are going to sweep in and keep our market propped up.
There are currently over 20,000 homes for sale on the GSMLS in Northern NJ. Combine that with the NJMLS, Hudson MLS, and FSBO numbers. Now combine that number with Long Island, NY State, and NYC. Just how many dumb big bonus holding investment bankers are there?
Caveat Emptor,
Grim
Most investment bankers “buy low” and “sell high”.
Not everyone follows this philoshopy, though…
-Richie
Investment bankers hoard and obscure information, and focus on volume of “transactions”. They couldn’t care less about buying or selling, they just want to advise on both ends of the activity, and extract as high a fee as possible, while immunizing themselves from risk.
They only run into trouble when their pure arrogance blinds them into visceral decisions in their personal lives. They are so used to have an overwhelming advantage by “playing with a stacked deck” in business, that they sometimes are lost in their own personal dealings.
Speaking from personal experience, bonuses of even 75K – 100K don’t go as far as one thinks. First you take out Federal taxes (generally at a higher rate on bonuses). Then take out SS/Medicare (still operational this early in the year). Then take out NY State taxes. If you live in NYC, take out NYC taxes. Then take out 401k, ESPP (that money is saved money, but its still not going to your paycheck). Some companies also defer part of the bonus or pay part in stock that cant be sold for a while.
All told, you get less than half in hand.
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