‘Building Binge Hasn’t Slowed’ In Manhattan
The New York Times has this report on Manhatten condos. “Condominiums have become a familiar sight in Manhattan in the last couple of years. But as these condos are marketed, each carrying sky-high prices and a competitive list of amenities, and still more are breaking ground, it is hard not to wonder whether there are enough buyers to go around.”
“Not only are there thousands of condos currently on the market, but the state attorney general’s office shows that this building binge has not yet slowed down and may produce a supply of new apartments that could be around for a while.”
“So far, applications have been submitted for more than 24,000 condominium apartments since January 2004, 7,000 of them in the first half of this year alone. This increase in filings comes as supply in the current market has been rising steadily, with broker listings nearly doubling since 2004. And since many developers list only a sampling of apartments in new buildings, the numbers of apartments available for sale is probably significantly larger than the inventory listed with brokers.”
“Sales slowed sharply at the beginning of the year, when buyers hesitated because of the uncertainty about the direction of housing prices. Jeffrey Jackson, the president of an appraisal company, said he had been consulted on half a dozen projects that may be postponed or converted to rentals.”
“The bullish view of the Manhattan real estate market is based on the belief that it is unique. As Gary Barnett of Extell put it, ‘New York is the epicenter of the world, and everybody wants to own something here.’”
“Susan Petri said that she and her husband have been shopping for a condo and that they found the same high prices at every place they looked. ‘This is New York, the demand will always exceed the supply,’ she said. ‘Everyone wants to live here.’”
“But her husband, Roland, was more skeptical. They are trying to decide whether to settle in New York, where she now works, or in Scottsdale, Ariz., where he practices emergency medicine. He observed that the amenities touted in buildings in Manhattan were not that different from those found in new homes in Scottsdale and wondered whether they should wait to see if prices came down.”
“During the years when prices were rising sharply and apartments were scarce, buyers were conditioned not to ask for concessions. If the price was too high, they would walk away. Today, appraiser Jonathan Miller has this advice to buyers: ‘Always try to negotiate. Developers may be more open than in past years to negotiating.’”
“At 170 East End Avenue, brokers were saying earlier this year that sales were slow. Orin Wilf, Skyline’s president, disputed this but added, ‘We have been negotiable on our prices. We are willing to work with customers,’ he said. ‘If a customer walks into our sales office and wants to spend $5 million on an apartment, and the apartment they want is $5.4 million, over 99 percent of the time the deal gets done.’”
“At another smaller project, the Abbey, a former parish building on East 16th Street being converted to condominiums, one apartment, a duplex on the top two floors, sold at a discount of $500,000, or about 27 percent below the asking price. Eight of 31 apartments are still listed as available.”
“‘From the developers’ standpoint the market talks to you,’ Herbert Hirsch said. ‘The market tells you what your property is worth.’”
“The New York Times reviewed condominium plans for larger projects, those with at least 30 units or those valued at more than $20 million. The review found that applications for 24,400 apartments in 240 larger projects in Manhattan and 5,000 apartments in 75 projects in Brooklyn had been submitted since January 2004. Of these, by the middle of June more than 13,000 had been approved for sale in Manhattan and 2,900 in Brooklyn.”
“The 24,400 applications far exceed the number of apartments actually on the market.”
“Last week, a report put the current inventory at 7,640 apartments, both co-ops and condominiums, up from 3,922 in 2004. In recent years, the total number of annual apartment sales in Manhattan has been estimated at 10,000 to 12,000.”
“Many newer projects, including conversions of rental buildings, are also in the works. There were 10,800 apartments in large Manhattan projects still awaiting approval for sale, including the 7,250 apartments in 59 projects submitted this year. About 2,300 apartments in Brooklyn are also awaiting approval for sale. If all these apartments are actually built, they could weigh on the market for several years to come.”
‘This is New York, the demand will always exceed the supply,’ she said. ‘Everyone wants to live here.’”
Not “everyone” sweetheart, you can have that cesspool!
While the desire to live in Manhattan may be infinite, the means to do so are not!
Who’s going to buy these overpriced shitboxes?
Well some do, but they’re waiting for the grossly overbuilt condo market to correct. The Times’s RE section has several buyer’s market type stories this Sunday — looks like they finally figured it out –though in a timid, between-the-lines way and about one year too late.
They could have really done their readers a service last summer by pointing out the unsustainability of this market, instead of writing b.j. pieces how buyers must be mentally inferior not to purchase in such a hot, hot market.
OH and P.S. while the Times is still wondering wide-eyed whether the market is overbuilt, the RE industry itself has admitted as much with its inventory figures (which I’m sure are understated anyway).
The NY Times is and always has been very pro-real estate industry. They are loathe to print anything even remotely critical. They will even run “human interest” stories about “hard working” landlords who just want “their own piece of the American dream.” Read between the lines, and what you see is a barbarian slum lord who sees no problem with a “temporary” three-week water shut-off in one of his apartment buildings.
The Times is disgusting when it comes to real estate. Read the Post instead.
‘They aren’t making any more land’ is one of the favorite sayings of the Real Estate Industrial Complex, but this article puts that old chestnut in the proper light. If there is anywhere with ‘no more land’, it’s Manhattan. But apparently tens of thousands of new dwellings are in the works anyway. They just build up.
Yep…no more land, but tons of new supply anyway. Prices in NYC will correct. As every other market, the NYC real estate market has been in the past, and will be in the future, cyclical.
Amen. They also build out — to Brooklyn, Queens, the Jersey side of the Hudson, etc. And there is plenty of room in Manhattan to build up and to renovate — the west side of midtown, the financial district and Harlem. It isn’t be lack of land that props up this market — it is the torrent of liquidity that is ultimately based here and on which most folks who can afford (or think they can afford) million dollar homes ultimately feed. When the financial markets crack, then NYC real estate will crack — but not before.
I’ve always wondered about the “there’s no more land” thing when it comes to Manhattan. If you walk around the city, there’s actually PLENTY of vacant land. Either just plain empty or dotted with vacant and/or dilapidating older buildings.
You don’t even need to go to the outer boroughs to find it. And since, unlike other US cities, Manhattanites don’t have a problem with living in very tall buildings with thousands and thousands of neighbors, that’s a lot of land, and especially air space, left.
Manhattan’s got a ways to go before it’s out of land.
This is absolutely true. One additional thing to consider, NYC is starting to privatize many of the old “housing projects” like they did in London. This will put thousands more units on the market, and also cause formerly “bad” neighborhoods to be stuffed with new condo buildings. There’s a lot of room to grow yet.
If I recall I beleive that New York is actually loosing population? Or at least not growing as much as the rest of the country. I have lived here for over 10 years and while sometimes I kick myself for never having bought. But things are just ridiculous. Everything is $1 million plus. I really cannot figure out where all of this money supposedly comes from. I know Manhattan is an “island” but it is actually quite large and that simply cannot explain why everything is 10x what it costs even accross the river. I think everyone convinces themselves that it can never go down. I have to believe that eventually there will be a serious correction. One interesting point made is how certain buildings are turning to rentals. Quite clearly the supply in the rental market can be more elastic than is thought. All you hear now is how rents are going to finally go up. But clearly much of the overbuilt condo market will be dumped onto the rental market. I have a feeling that “luxury” condos are going to be a cheap rent in the near future.
NYC population has been going up recently (about 100,000 since 2000 and 800,000 since 1990). Lots of folks moving out, somewhat more moving in.
Weeeeeelll, not really. NYC has experienced quite a significant outmigration -here’s a newsday column on it:
http://www.newsday.com/news/columnists/ny-opkea244715009apr24,0,4830156.column?coll=ny-rightrail-columnist
As for the housing market holding up until the financial markets collapse here, the U.S. housing market arguably IS the financial market, or a good pillar of it. And it’s already cracked, and might crumble any time.
This seems like a fruitful area for an inconclusiuve data debate. My source was the Census Bureau, as was the Newsday column, but I don’t have the ambition to dig deeper.
http://tinyurl.com/z6kgt
If there is any City in the USA that needs NEW buildings, its NYC.
Most of the 12 million people live in 1940’s or older style crappers, with lousy insulation, cracking walls that have been painted over 1000 times.
WOW such Paridise. Out on the “Island” the homes are 1800 sq ft. creeping floors and stairs, with under insulated windows & walls.
HEY Gary “Bart” nett…..you are right NYC is the epicenter, of the Largest Financial Earthquake in the histroy of mankind…….Leverage engineering, fractional money is debt is money, and crooked bankers. { greatest Alchemists in history }
Now Susi my PET ri….. “demand will always exceed supply”(?) Is this your new theory in economics…you are teaching part time @ CUNY?
Now lets get some perpective: “everybody wants to live here”
VEGAS 1.4 million population 40,000 condo unit permits..
NYC 12 million population 24,000 condo unit permits..
{these numbers demonstrate the escence of N.Yorkers lives, .’DE LU SION AL Commanders of the South seas’.
Inspired, I’m not sure I get your point. If NYC has only 24,000 condo permits compared to LV’s 40,000, you’d think NY is not facing oversupply, at least not of the magnitude other cities are facing.
Manhattan vs. Scottsdale, AZ. ?
Not even close…Manhattan by leaps and bounds.
The market is divided among the wall street sector and the rest of us. Whats being built are 2 bedroom condos in the millions and one bedrooms around $700,000. Whats being built up, is in the high end price range. Basically if you work for Wall Street your the customer. I vaguely remember reading somewhere that one of the largest employment booms after the stock bubble burst was in the financial sector (go figure). I agree with one of the posts above. Until this sector implodes, those million dollar condos will stay above a million dollars. Some people that work in the financial industry get bonuses at the end of the year that is 20 times the median income of NYC. The rest of us, can just continue to rent for half the cost of buying which is not such a bad deal if you love this city.
There are some places that would be fun to live if you’re single or married without kids and have the money to live well there. But it can be pretty hard to raise kids in those kinds of places. For a lot of people, Manhattan would be a difficult place to raise a family.
‘Jeffrey Jackson, the president of an appraisal company, said he had been consulted on half a dozen projects that may be postponed or converted to rentals.’
Manhattan repartments, anyone?
It appears that NY rents haven’t been as negatively effected like other cities where people went on RE buying sprees.
I just read an article in the Economist that I found interesting and pertinent. Next to the housing builders, the stocks with the lowest p/e’s are Wall Street investment banks like Goldman Sachs. Since they have been making boatloads of money, it’s evident that Wall Street itself expects a melt down, possibly beginning with the murky world of derivatives or hedge funds. BTW, in the most recent census count (2004-2005, I think), the city lost 23,000 (documented) residents while permits for new buildings are at 30 year highs. Yes, new housing stock is needed, but not at these prices. All indicators point to a major correction.
Agreed. The debate over population stats is really just a detail. NYC homes suffered significant price declines in real terms during the early and mid 1990s, in the wake of a much milder real estate bubble. I just think that the timing for a serious decline now depends on what happens to Wall Street.
Right. NYC needs housing for the thousands of impoverished immigrants it takes in each year. It has more than enough stock of million dollar 2-bedroom condos.
We like to visit NYC from time to time though we haven’t stayed overnight there in several years. We used to stay at a nice hotel north of Manhatten for somewhere south of $150 per night. I assume hotels are more expensive now. But even if the hotel we used is $300 per night, I think that’s peanuts compared to owning something there. New York is a nice place to visit but I wouldn’t want to live there.
Here are the facts on NYC population, from one who knows.
New York City has more housing units than ever before, and they are more or less full. But that isn’t how the Census Bureau estimates population. They add up births, debts, and net migration — based on where taxpayers file their tax returns.
The problem is that NYC attracts lots of young people and immigrants who didn’t file tax returns the year before, and thus are not counted as “moving to New York.” Many move out after living here a few years and filing tax returns, hence are counted as moving away. Hence the census bureau’s underestimate.
My guess is that the number of people per housing unit is going down, as there are fewer children (the children of the baby boomers and the 1980s and 1990s immigrants are moving out). But the number of housing units is going up. I’d say it’s probably a wash, but with more adults.
(For a lot of people, Manhattan would be a difficult place to raise a family. )
Speaking from experience, if you don’t insist on an American quantity of space and stuff, NYC would be the best place in the U.S. to raise kids, were it not for the quality of the public schools.
Also speaking from experience, Manhattan now has some of the best public schools in the country. Unfortunately some of the worst, too, but there has been a huge change in the last 7 years or so.
The truth is, Manhattan is the only place in the USA where “it’s different here” is actually true. That’s not to say it’s immune from a real estate crash, it’s had some of the worst.
I know some people who bought a co-op apartment on 5th Ave. in 1980 for under $100k. They sold it for over $9 million in 2001, and I’m sure it’s worth $14 million by now. In fact, the building is one of those that will not even interview you as a buyer if you can’t prove a net worth of $100 million, and the other condition is, no mortgages allowed — cash on the barrelhead only. There are about a dozen buildings here with that rule: “we’re not even going to let you write us a check for $10 million until you can prove you’ve got $100 more where that came from.”
I’m making two points. One, think of how bad things were in 1980 for a home like that to be so undervalued. And two, think about how far into the stratosphere it’s gone since then. It’s not unfathomable to imagine the wheel turning once more.