revisiting the NY Times “time to PANIC!!!” piece with more (contrary) Manhattan loft sales data
what does “almost becoming the norm” mean in TimesSpeak?
The inter-tubes are still buzzing over that main real estate article in Sunday’s New York Times, In A Seller’s Market, Every Minute Counts, which I hit in my same day post, June 2, not every buyer should panic: that scary New York Times article is right, to a degree. My ambivalence about the well-reported article by Michelle Higgins was clear enough, I hope:
There’s nothing in the article that is wrong … 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 … just as there are many quick contracts …. 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”.)
I re-read the piece last night, and found something that really does bother me that I glossed over in my first reading and attendant rush to add some data to the discussion. The lede is both hysterical, and unsupported by the reporting; worse, it is probably unsupportable (a polite way of saying “wrong”). I will emphasize my beef:
If there was any doubt that New York City real estate has become a seller’s market, consider the following: open houses are packed to capacity, bidding wars and all-cash offers have almost become the norm, and some listing prices actually rise, not drop, after a home is listed.
I have no problem with the open house packing or that “some” listing prices rise, though the first is more relevant to her point than the second, at least until she shows how many prices increase after listing. I have no idea what Higgins really means by “almost become the norm” but I suspect that most readers will take that to mean something like almost half, if not more. (A Times editor might well think that to be a “norm” requires a more-than-half rate of occurrence, to be usual, typical, or standard.)
is Humpty-Dumpty a NYT editor, or has NYT gone through the looking glass?
The article has some horror stories anecdotes about bidding wars and the advantage that all cash buyers have over buyers who need both a mortgage and an appropriate appraisal value, but no hard data. Not even a perfunctory quote from a mortgage lender or from The Miller “we are seeing many more all cash deals than in prior markets”. That would be something. But I want to pick at the bidding war element, because I do have data, and the Manhattan loft market niche data do not support that claim that “bidding wars … have almost become the norm”, unless those terms have no rational limit.
I used a data set of the most recent 150 Manhattan loft sales for which I have complete data on my Master List of Manhattan Lofts Sold Since November 2008, not because 150 was a round-ish number, but because that takes me back to a round date, for downtown Manhattan loft sales since March 1 between $500,000 and $5,000,000. As I said in that Sunday post,
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)
Can we agree that 33 out of 150 (22%) is not “almost becoming the norm”?
The Master List permits you to check the green (above ask) sales prices against the blue (not discounted) asking prices; you will find that 5 of the 33 bidding wars were off prices that were discounted. It is fair to count them as “bidding wars” but further review (at least in the downtown Manhattan loft niche) reveals that only 28/150 were bidding wars that could cause a well-grounded buyer to consider panicking. If the buyer finds a unit that has been on the market for some months and then has a (too low) price drop, it is that buyer who lost an opportunity by not bidding (without competition) off the second-to-last asking price.
My quoted Note Bene was that there may well be bidding wars that result in deals below asking price (a bidding skirmish, if you will). The provocateur reporter Higgins could fairly count those, if she were counting at all, but she’s not. Only the parties and agents in such transactions would know if they did, in fact, involve multiple bids, but in my experience the “tell” for such a deal is a closing price ending in other than “000” or “500”, especially with a fairly quick contract. There are only 4 of those public deals, at $1,236,750, $2,583,300, $3,382,626, $2,365,471, but 3 of those had been on the market more than 11 months. That $3,382,626 sale was almost certainly a below-ask bidding war, as 60 Collister St #1D took only 14 days to find a contract at a modest (3%) discount from ask.
So I am going with the ‘fact’ that there were 34 bidding wars out of the last 150 downtown Manhattan lofts sold publicly between $500,000 and $5,000,000. Can we agree that 23% is not “almost becoming the norm”? Subtract the 5 above-discounted-ask sales, and you get 29 sales out of 150 (19%) in which buyers would panic, if so inclined. Further from being “almost” a “norm”.
Funny thing is, the article does not need the line about bidding wars “almost becoming the norm” to make the general point that, for some buyers, every minute counts. Higgins oversold and under-delivered about the bidding wars, as there is no support for the norm-becoming statement and downtown Manhattan loft sales data disproves the statement.
I suspect (don’t make me count again today, please) that there are more above ask sales lately than in prior quarters, and Higgins could probably easily have gotten someone credible to approximate that in quotable fashion. But she didn’t do that (and an editor didn’t insist); worse, what she did say is both more provocative and wrong.
That’s what I don’t like about the article. She’s wrong and hysterical. But now The Public “knows” that “bidding wars are almost becoming the norm”, because some lady at The Old Grey Lady said so on Page One of the Sunday real estate section. In the first sentence, no less.
© Sandy Mattingly 2013