January 5th 2015
The Real Deal
On individual topics, the theme seemed to be that this will be the year that might banish the crazy. Lending standards? “We expect some softening on the residential side, as we all agree that Ben Bernanke shouldn’t have trouble doing a refi,” noted Colliers International’s Joseph Harbert. Inventory? More projects coming online, though not enough in some segments: “Due to the rising costs of land and exorbitant construction budgets, we will see few ground-up rental projects in Manhattan,” notes Town Residential’s Andrew Heiberger. The outer boroughs? Well, read on to see what Eastern Consolidated’s Peter Hauspurg has to say about Queens…
President, Warburg Realty
1- While there is plenty of new construction, especially on the high end, limited resale inventory continues to be an issue. What are you expecting on the inventory front in the coming year?
I doubt it will be all that different. So much of what is being built is not for the ordinary New Yorker. For a number of years, we have had what are essentially two markets — one for ultra-high-end new product mostly aimed at foreigners or global citizens, and one aimed at more ordinary New Yorkers. I expect there will be the beginnings of a glut in the former in 2015, while we continue to experience inadequate supply in the latter.
2- Do you expect buyers to gain ground in 2015 or do you expect sellers to continue to have the upper hand?
Sellers have already lost the upper hand in many segments of the marketplace. A lot of the time they just don’t want to acknowledge it.
3- Several industry leaders have said recently that prices cannot continue to rise. Do you have concerns about a luxury market bubble in the coming year?
No. Generally these issues are self-correcting in the absence of greater economic forces bringing too much pressure to bear. I think we all welcome a hiatus in price increases. But seeing prices cease their upward trajectory is not the indication of a “bubble.”
4- Do you foresee foreign buyers continuing to drive the luxury market? Are there particular countries you expect more buyers to be coming from?
No doubt ultra-luxury purchasers will continue to come from the BRIC countries. And I expect we will see more Africans.
5- Are you concerned that the anticipated interest rate increase will put a damper on the NYC market in the coming year?
If interest rates increase in a significant way, that will likely have an impact on the lower end of the market, where the rent vs buy ratio tends to be delicately balanced and can easily tip. I think that end of the market is the greatest point of vulnerability.
6- Which sectors of the market, both in price and product type, do you expect to perform well in NYC this year?
These days, if given their druthers, most people want condos. So they will continue to perform well. I expect that the prejudice towards new construction or mint condition will also persevere. Most buyers have simply lost the appetite for doing a big renovation. And I anticipate, barring a big interest rate hike, that the market $2 million and below will continue to be the hottest, and the locus of the largest number of competitive bidding situations.
7- Which new projects do you expect to generate the most excitement in the NYC residential market in the coming year?
Hard to believe at this point that anyone will be all that excited by any of them.
8- How do you expect the industry to respond to Mayor de Blasio’s affordable housing initiatives in 2015?
Hopefully with enthusiasm. We sure need those initiatives!