November 10, 2016

The First Domino

A report from the Real Deal on New York. “Free rent. Paid attorneys’ fees. Falling prices. It sounds like a scary flashback to the dark days of 2009. But it’s actually all happening today in different segments of New York’s residential market. After a multi-year run-up marked by prices that seemed to be on a never-ending upward trajectory, the tables have started to turn. Now, at least in many cases, it’s the buyers and renters who are holding the cards.”

“‘A year ago, it was, ‘If you want to see my property, you’re going to need an appointment,’ said Joshua Silverbush, research director for the Marketing Directors, which specializes in new development brokerage. ‘Now we’re getting invitations.’”

“The goal for sellers or landlords, of course, is to preserve the face value of their property — even if it means taking a slight financial haircut elsewhere. That’s largely because it allows them to maintain prices for the rest of their units. But these sweeteners, whether on the condo or rental side, are typically a precursor of what’s to come. ‘It’s the first domino,’ said Robert Dankner, the president of Flatiron-based brokerage Prime Manhattan Realty. ‘It usually ultimately leads to price breaks.’”

From Market Watch on Florida. “All signs lead downward for the Miami condo market. In the latest Q3 condo market statistics for the Greater Downtown Miami and the Miami Beaches, prices declined slightly by 1.4%, and all other leading indicators are soft; In other words, the market is likely to take a further hit. This has been the slowest 3rd quarter since 2009 for Miami condo sales. This latest quarter’s numbers expose a year-over-year 25% decline in condo sales volume in the Greater Downtown Miami and the Miami Beaches.”

“The rule of thumb for a balanced market in Miami is 6-12 months of inventory depending on the type and price point. If we are under 6 months, sellers are in control and prices typically go up. If we are above 12 months, buyers are in control and prices typically go sideways or down. We are currently at a whopping 24.5 months overall inventory. (Using sales pace from past 180 days, as of Oct. 24.) With this glut of inventory, it is increasingly likely that we will see more downward pressure on prices until the inventory dissipates.”

The Oklahoman. “The other day I saw a Realtor on Facebook casually describe a $200,000 home as ‘lower end.’ A Realtor in Oklahoma City. Commenting on the Oklahoma City market. She was in business mode, surely. Surely, she sells homes at the upper price points — say, $300,000 up to $1 million plus, which is the stratosphere for prices here. So maybe $200,000 is beneath her — her usual experience, at least. She knows that $200,000 isn’t really the lower end, surely.”

“Either that or, as I then posted in a snort of pique, she’s ‘completely out of touch with most of us who ‘do most of the working and paying and living and dying’ (as George Bailey put it) around here.’ But I didn’t name names on Facebook, and I’m not naming names here. It is a matter of perspective. Besides, ‘Buy all the house you can afford,’ like ’smoke ‘em if you got ‘em’ and ‘flaunt it if you’ve got it,’ are rooted in ‘those good old-fashioned values on which we used to rely’ — right?”

“Uh huh. And LORD, forgive me for quoting ‘It’s a Wonderful Life’ in one paragraph and the ‘Family Guy’ theme song in the next, even if they are great mile markers for where we’ve been and where we are in this country, as we try to figure out where we’re going. But it sparked a good Facebook thread — good in that it reminded some folks of just how good we’ve got it in Oklahoma. Because while $200,000 is above where most of us live, it actually is ‘lower end’ in some places.”

“First some actual numbers: The average price of homes sold last month in the Oklahoma City area was $183,154, down from $190,429 in September 2015; and the median price was $156,450, down from $160,000, according to the Okahoma City Metro Association of Realtors.”

“Now, the ‘lower end’? A California friend, T.R., responded: ‘Oh honey. $200k.’ Me: ‘Right? LOL what’ll that getcha where you are?’ T.R.: ‘Our house in Ventura is a 2br built in 1926. 1300sf, nothing updated since the 70s, needed new wiring and plumbing and the foundation bolted. And it’s still on septic, and will need to be connected to city sewer when the tank finally goes. We paid $369k.’”

“Me: ‘A few years ago, and at 52 what I mean by that is ‘10,’ some folks made some ado about the reverse migration of Okies coming back here from the Central Valley and environs — or their retirement-age children and grandchildren. They came in here with California housing dollars and, well, bought large!’”

“T.R.: ‘Yeah that’s happening all over the west, I think.’”

“Me: (Tagging T.T.), T.T., what’ll $200,000 get you, housewise, in Maplewood, N.J.? Hee hee. T.T.: ‘In Maplewood, $200k will get you a house in Irvington (high crime area).’ A.C.: ‘Out here in Colorado, that is a lower-end home. Can’t even find a condo less than $200,000. Denver metro. We’re hoping to buy a town home in the next year or so, but our budget will be under $250,000.’”

“Me: ‘R.M., check in from Brooklyn.’ R.M.: ‘Well, this is Zillow’s estimate on the value of my 575 sq ft apartment: $837,110. We do not own it. Prices are crazy here.’ Me: ‘OMG.’”

“H.M. (in Oklahoma City): ‘It’s stunning to me that a ’starter home’ is $140k these days.’ D.A.: ‘$200,000 is cheap now here in the Twin Cities. ‘Affordable housing’ is an oxymoron.’ S.L. (in Oklahoma City): ‘I guess I’m living in poverty and blight. Insulting as hell.’”

“So there you go, some experience to go with home price stats, which are all over the map literally and figuratively, although clustered closer to everyday reality in Oklahoma. Here, $200,000 most certainly is not ‘lower end.’”