October 1st 2013
Residency NY Magazine
The residential sales market traditionally cools just after Memorial Day and then picks up again after Labor Day, but apparently this year, with a market this bright, one has to wear shades. We interviewed four NYC real estate experts to get the lowdown on what buyers, sellers and agents can expect during this summer selling season and how all can prepare for the upcoming fall.
What are you seeing in the market as we head towards the summer selling season?
Signet: The state of the market as we head into June is “frenzied.” At BOND we are currently doing 40% more sales transactions than we did in the Spring of 2012. Our fees are up dramatically; our average sale price has doubled and we are getting almost every accepted offer into contract. The most noteworthy part of this equation is the number of different agents that are participating in the feast. Naturally the top-producing agents in each of our offices continue to impress, but the real indication of an unusually hot summer sales market is the number of deals being done by agents doing their first and second transactions. BOND is also listing more properties than ever—and continuing to get new exclusives even as the temperatures rise and sellers traditionally want to wait until the fall. Open houses continue to be very busy, multiple bids continue to be the norm and all-cash buyers are heading to the front of the line. With everyone talking about lack of inventory, our new listings are not sitting on the market for very long. While the summer is typically a slower time of year for sales, I see no slow down in our future anytime soon.
Pinkas: I (along with my colleagues that have similar practices to mine) always hear that the summer market is “slow,” but for the last three years that could not be further from the truth. For starters, my firm has traditionally had the three busiest months of the year in terms of new transactions and closings during June, July and August. This year is no exception and judging by the month of May so far it seems like it may be even busier than normal.
Heddings: The most telling statistic for Heddings Property Group is that we are on pace to do more sales volume in our Manhattan office alone than we did all of last year in Manhattan, Hamptons, Westchester, Greenwich and Rockland combined. We have also had a three-month run of properties selling in 1-4 days at prices over the asking price that have shocked both us and our sellers. My agents and many of my colleagues have shared anecdotes of properties with 6 or more bids and after all settles, it is the 4th or 5th offer that ends up going to contract. Emotions are running high. I believe that this year’s summer market will provide more of what we have seen in 2013 thus far with the exception of the rampant bidding war scenario in which we are currently experiencing. Mortgage rates will remain low and inventory will likely shrink further after a slight pop this spring. Sales volume should remain steady to slightly lower through the summer.
What should buyers, sellers and agents be doing to prepare to compete in this market?
Signet: Because there are no indications that the market will cool as we head towards the solstice, buyers should get a pre-approval from a lender, have a real estate attorney in place and have a REBNY financial statement filled out and liquid assets ready at a local bank. Agents should take this time to preview properties for their buyers. Wasting time showing properties that don’t meet buyers’ criteria makes no sense. Agents should thoroughly know the summer inventory.
Pinkas: Because people do tend to vacation in the summer months, it is prudent for agents, buyers and sellers to speak with their attorneys in order for the attorneys to obtain power of attorney from their clients (this enables them to close transactions on their client’s behalf when they are away). One warning that I can give is that it can take co-op purchases much longer to close in the summer months since members of the Board are away on vacation (instead of the normal 60 day closing it can take upwards of 90 days very often).
Abrams: Agents, buyers and sellers should prepare for the summer sales season just as they do for the other seasons because this summer things are not slowing down. Sellers and their agents should price properties within realistic ranges by carefully analyzing the recent sales history of similar-type apartments. Overpriced properties rarely attract bids in any season. Agents should educate both buyers and sellers on the process, what to expect and manage expectations along the way. Sellers should streamline and edit their properties of clutter and make any necessary repairs before marketing their properties for sale.
Heddings: Buckle in! In all seriousness, with the exception of the bust years (2008ish-2010), the local Manhattan real estate market doesn’t seasonally slow down as a whole. There is typically less activity with larger family-style apartments because parents want children to be relocated prior to the start of the school year. The one, two and even three bedroom properties – particularly condo units that attract both foreign and domestic investors – continue to sell over the summer. Sellers, particularly those who own properties with “special” private outdoor spaces need to make sure that the space looks its best and is marketed during the time when most people would be interested in those outdoor spaces.
What benefits might there be to listing and selling in the summer?
Signet: With the lack of inventory we are currently experiencing, I believe the summer is as good of a time as any for sellers to list. New properties coming to market have been inundated with buyers and their brokers in the hopes of doing a deal prior to the ‘word getting out.’
Pinkas: People tend to be in better moods and more likely to go shopping for apartments when the weather is nice. A bright, sunny day always makes a difference!
Abrams: The benefits of listing and buying in the summer are that sellers and buyers who are active during the summer season tend to be serious. During other seasons both sellers and buyers can be testing the market; going to brunch and visiting an open house on a beautiful fall Sunday may be a hobby, but during the summer it is a serious endeavor. Buyers who are pounding the pavement in 90 degree weather and sellers who decide to market their property during the summer months want to make a deal. Since there is typically less property on the market in the summer, a seller will have less competition; buyers will also have less competition and may be able to negotiate more favorable terms.
What neighborhoods are getting the most traffic?
Pinkas: I am seeing the downtown market (below 14th street) – specifically SOHO and Tribeca – have a huge increase in transactions and in price point.
Abrams: New York has become a city where virtually all neighborhoods are getting traffic. There are no longer unacceptable areas in which to live. Open houses have been crowded on the Upper East Side, Upper West Side, all over Downtown, Harlem and Brooklyn. We expect more luxury new development condominiums to come to market in Tribeca than we have seen in a long time. Most of this product, however, will be in the luxury price range, so it won’t be appropriate for other market segments.
Heddings: Upper West Side is off the hook!