not every buyer should panic: that scary New York Times article is right, to a degree
at least, not every buyer should always panic
If you are a buyer actively searching for a Manhattan coop or condo, chances are good that someone you know or love has already scared you with In A Seller’s Market, Every Minute Counts from the New York Times, perhaps even days before it appeared Sunday Real Estate section (it hit the web on Friday). Chances are close to 100% that you will have seen the hard copy of the New York Times Real Estate section casually left on a kitchen counter or coffee table at several open houses you went to today. You know that provocateur reporter Michelle Higgins tells a few horror stories (with choice quotes from buyers, sellers and, of course, agents) but she also offers 10 tips to buyers who find themselves in competitive bidding situations or who wish to induce a seller to avoid that process. So there’s that.
There’s nothing in the article that is wrong (and it has already gotten a “GREAT READ articulates current pace” link and re-tweet from The Miller on The Twitter), and much that is right. But it worries me, in the way that report of hysteria can have the effect of increasing the level of hysteria. Of course there are many bidding wars, and many loft sales above ask (as readers of this blog and people who know what the green background on the Master List of Manhattan Lofts Sold Since November 2008 know), just as there are many quick contracts (the red-ish background on the Master List). And, of course, inventory is consistently at historical lows, with no signs of an increase.
But it isn’t like that for all buyers and sellers, though now nearly all buyers are tempted to panic, and nearly all sellers are tempted to be very demanding. (Tip #3: “forget about getting a deal”.)
data = good, more data = gooder
Higgins uses enough data to support her thesis to show how hard it is for the media to get timely and useful data about the Manhattan residential real estate market. This first sentence is good, hard data, but hardly refined enough to support the rush-rush-rush scenario, while the second sentence is more anecdote than data, and an unattributed anecdote at that:
Apartments are going into contract at a faster pace, with listings lasting 105 days on the market, down from 156 a year ago, according to Miller Samuel. In popular neighborhoods like the West Village, it’s not uncommon for sought-after properties to go into contract well above the asking price in the head-spinning span of 10 days or less.
It would be nice to know what “it’s not uncommon” means, wouldn’t it? Especially if you were interested in buying in a popular neighborhood like the West Village … or a downtown loft.
I have done “4 colors of downtown Manhattan loft momentum” posts based on the Master List (in addition to green for above-ask sales and red-ish for contracts within 30 days, there’s a yellow for sales at ask and a blue for lofts that sold with no price drop off the original price) on April 25 and April 4, as you regular Manhattan Loft Guy readers know.
loft data = goodest
My suggestion is that buyers not panic (and sellers not gloat) without talking to their agents about the specific market case for a particular loft at a particular asking price. My fear is that the Higgins piece will cause both more panic and more gloating than an individual analysis would warrant, but … that’s how you sell newspapers, and get eyeballs on the inter-tubes.
Fortunately for those of you who access the Master List, you’d know that of 150 downtown Manhattan loft sales with full data in March, April and May (so far), 41 went to contract within 30 days, 16 of those within 14 days; 33 sold above the asking price and 25 sold at the asking price (N.B., the ask is not always the original price and some bidding wars result in below-ask contracts). On the other hand, 78 of that 150 loft sale data set took 90 days or more to find a contract.
Certainly, no one should panic (or gloat) over a loft in that last category (52% of the data set since March 1), while that set of 16 that went to contract within two weeks and that set of 33 that sold over ask (there’s going to be some overlap there; check the Master List for specifics) are fertile grounds for panic. Just playing with numbers here … ‘only’ 27% found contracts within 30 days, which sounds as though the other 109 loft buyers would have had times for things that The Higgins Tips suggest avoiding (like waiting for open houses, negotiating over contingencies, using a ‘normal’ down payment, among them).
And in the 71% of these deals that closed below the last ask, buyers might still have gotten “a deal”. (To be fair, Higgins does say in her tip “forget about getting a deal”, that “[t]hat won’t fly for attractive listings that are particularly scarce, especially if they are priced fairly”; some of that 71% were not “attractive”, “scarce”, or “priced fairly”. )
Take 2 aspirin and call me in the morning. You’ll feel better if you do.
© Sandy Mattingly 2013