Dog Days

In two weeks it will be Labor Day, which I still regard as the end of the summer. It has been a season of recalibration, in every way; Brexit, the two political conventions – no one quite knows what to expect. In this environment, our real estate market in New York continues to experience its complex and uneven price contraction.

In the ultra high-end condominium market, the willingness on the part of many sponsors and sellers to negotiate has brought about a resurgence in sales. While the days of buyers paying full price PLUS lawyers’ fees and transfer taxes are definitely behind us, properties with strong design and good bones trade now between 5% and 10% below their asking prices, with negotiated fees on transfer or flip taxes. These units continue to appeal to a broad spectrum of buyers because they are move-in ready; many of these purchasers, owning two or three homes or more, lack the appetite to renovate a property they may occupy for only a month or two during the year. We continue to see very high-end neutral finishes as those which sell the best. Once the color palette veers away from white or beige stone and cabinetry, and light floors, the sale becomes more challenging.

The summer has also been busy for properties under $2 million, in every borough. This segment of the market, which appeals to first-time buyers, young professional couples, and investors, still experiences more demand than supply. Good properties all over town sell quickly, and have exhibited little to no reduction in value during the past six months. There is no summer slowdown for these units, since the buyer pool either flies in to purchase regardless of the time of year (the investors) or remains at work in the city during the summers. These mostly younger buyers are accommodated by weekday evening Open Houses, rather than just the traditional Sunday. Otherwise, this market slows not at all as the dog days of August set in. 

The greatest challenges for sellers and agents alike remain in the mid-market and upper mid-market. Properties between $3 million and $8 million, particularly co-ops, often linger for months and sometimes years. Sellers play broker roulette, replacing one for another when, more often than not, the broker is not the problem. The primary issue here reflects seller expectations: unlike sponsors, who must make price adjustments to facilitate sales for business reasons, individual sellers easily become emotionally attached to a price which represents validation of their choices and their taste. And not all agents give good advice. I have viewed several properties recently which, during their first six months on the market, were both unrealistically priced and not staged: a lose/lose situation.

I have read a number of articles recently lambasting the bland conformity of staged units, and I have only one response: it works! A well-staged, well-priced property WILL sell – maybe not in a week, or even a month, but within a reasonable period of time. Remove either the staging or proper pricing from the equation and all bets are off.

I don’t anticipate a dramatically different market in the fall. More inventory will arrive on the market, although not too much. No one lists their property speculatively in a market like this one. Real sellers, acknowledging market realities and pricing accordingly, will sell their properties, although rarely any more with multiple bids or aggressive competition. Some buyers will try to time the market, holding off for maximum purchasing power (and thereby missing the market!)  Transaction volume will continue lower than at the same time last year. The election will come and go; more certainty will raise buyer spirits, and January of 2017 should bring a busy, balanced market environment to the city.