Warburg Blog

There’s an impressive assortment of competitively-priced seven and eight-room prewar apartments available for sale in Carnegie Hill. Recently, these had been scarce as hen’s teeth, objects of bidding wars, and certainly it was impossible to contemplate a prewar 7 for under $3 million. Now, it’s entirely possible. In fact, there are several prewar 8-room apartments on Park Avenue (in various states of repair) with an asking price of under 3 million – further challenging the current price of the “Classic 7” – some of which are priced below 2.5 million. The Carnegie Hill retail landscape is changing too – old standbys such as Bolton’s have papered up their windows (just when it might have become a chic shop) as well as retro Feldman’s Housewares at 87th St. Petak’s has also vacated. However, despite the turnover in storefronts, the neighborhood retains its charm and there’s plenty of life in the streets. And Yura on Madison, the Swifty’s of the stroller set, is always jammed.

Looks like the weather will be on our side.  Come join us and support Tribeca’s local artists.  See the work of artist Owen Gray.  Link below for more details.  Starts Friday, April 24, 5-8pm, Sat., Sun., Mon. 25,26,27th from 1-6pm.  http://www.toastartwalk.com/index.pl 

Earth day is tomorrow … but there are so many things that we can do each and every day to celebrate and protect our environment. A few super simple tips:

• When not in use, turn it off. This works for water, lights, AC and even your computer!
• Bring a bag with you next time you go to the store.
• Recycle everything from newspapers to hangers and clothing to vegetable matter.
• Jump on the subway or better yet, ride your bike.
• For a few extra dollars, switch out your light bulbs to energy efficients for long term financial and environmental savings.

A great example of “everything green” is a new listing that we are fortunate enough to be marketing. Check it out at http://warburgrealty.com/property/305072

And remember, both at home and on the go, even the little things truly do make a difference.

Following is a preview of my upcoming Manhattan Market Watch to appear in the May issue of Mann Report.

On the first days of April as I write this column for May publication, it’s important to acknowledge that we’re in a much improved position than last fall when overwhelming uncertainty gripped the Manhattan marketplace. With the tipping point of the Lehman Brothers bankruptcy in mid September 2008, real estate activity came to a near halt until the end of last year. Open houses were quiet, some buyers who were already in contract renegotiated prices, while others walked away from deposits, leaving everyone else on the sidelines waiting to exhale.

Not surprisingly, the number of actual closings for the First Quarter of 2009—which reflects last fall’s inactivity and scarcity of signed contracts—is down nearly 50% from a year ago. The press has sensationalized this dramatic statistic, which tells only part of the story of what is occurring in these first months of 2009. A more important marker, though a more difficult stat to track, is the number of contracts signed during this period. Tempted by falling prices and new entry levels, buyers negotiated with realistic sellers, and there was a significant uptick in the number of signed contracts beginning in mid January and continuing at this writing: so Second Quarter of 2009 data for closed sales will be much improved.

Real estate transactions this year may have started slowly, but the number of signed contracts for Manhattan apartments increased steadily in the first quarter, though February fared better than March. At the same time, there were better than expected gains for both new and existing home sales throughout the US. While in the early weeks of March, stock market declines were in the dizzying triple digits, by mid month, the Dow had rallied significantly. Similarly, the number of contracts signed zigzagged during March.

We’re turning a corner
Despite the downturn, there are scores of examples throughout the city of properties that are finding their sales threshold. Many apartments that have been on the market for 6 months or longer, with repeated price reductions, have reached new value levels and are attracting the attention of buyers with pent-up demand. In a number of instances, where the price was perceived to be below market, there have been multiple bids. Similarly, handfuls of newly listed properties at perceived bargain prices are also securing full or near asking prices.

In this climate, competitive offers need to be handled skillfully since much is at risk in this challenging environment. A certain degree of humility needs to take the place of the bravado of past years. Operating in a buyer’s market, today’s purchasers have time on their side and numerous alternative choices to consider. Broker expertise and judgment are valued highly, and good relationships between brokers are all-important so trust can be engendered to further negotiation and facilitate the deal.

In this market as in any other, the ethics of a verbal handshake speaks volumes. Once an offer is accepted, it’s best for a seller to stay with the deal and continue to show for back-up only. Sellers are cautioned also not to lose momentum: to issue a contract within 24 hours; to set an agreed upon time for a buyer to return a signed contract; and to have all required documents for review at hand, including the last two years’ financial statements, house rules, proprietary lease, transfer requirements, alteration agreements, and if appropriate, offering plan and amendments. With angst on both sides of the table, lengthy delays with contract signing can jeopardize the deal.

Adapting to the new landscape is especially painful for those who bought at the height of the market, when prices were inflated and double digit appreciation was expected annually. These sellers are counseled to wait if they can or to bite the bullet and price below what they paid. Even after the market stabilizes, price appreciation will likely be modest for the next several years.

Sponsors of new developments with unsold inventory are also hurting. Financing continues to be problematic in these buildings. Additionally, unlike individual sellers, developers are bound to their offering plans and have limited flexibility with end pricing. Price adjustments would not only impact any earlier sales, but in many instances, they are prohibited by the project’s lender. Instead of rebates, developers are providing upgrades, and offering to pay closing costs to attract and retain buyers.

Last fall’s somber mood has lifted this spring. We’re not out of the woods, but we have turned a corner. Credit is easing and mortgage rates are still dropping, but because of the surge in refinancing, applications are stalled and banking standards remain very tight. While it’s tough to predict and pinpoint the moment of recovery for our economy, it’s safe to say that some time this year Manhattan real estate prices will find a bottom. Many believe we’ll bump along an uneven terrain until 2010. It will take time for the national and local economies to stabilize, but solid residential real estate deals are being made in Manhattan.

Shirley Hackel
Executive Managing Director
212-439-5197 / shackel@warburgrealty.com

Today the first quarter market data appeared in all the papers. The Presidents of Corcoran and Elliman were quoted, along with the appraiser/media star Jonathan Miller.  And the information about the first quarter was, of course, accurate as far as it goes.  What these stories always fail to note, however, is that this news is not new. First quarter closings represent fourth quarter deals, which take sixty to ninety days to turn around. So the actual market data contained in these closing reports is months old. The only reliable indicator of current market activity is new deals, represented by signed contracts.

So, about those signed contracts: they are on the rise. At Warburg, we did 90% of the deal volume in February 2009 which we had done in February 2008. Prices were a little further off; our dollar volume was more like 25% down year over year for the month. And March does not seem to have been so bad either, although we did lose the first two weeks as NO buyers would sign anything after the stock market crashed early in the month. Today, with stocks rallying at least for now, we are seeing a lot more showings, a lot more offers, and deals.

The key change between contract volume in the last quarter 2008 and the first quarter 2009 is seller capitulation. Many sellers have finally realized they have to accept the realities of today’s marketplace if they want a deal. Buyers are willing to pay today’s prices. And they are showing it by doing it in increasing numbers.   THAT is the news.