Has Real Estate Recovered From the '08 Hangover?
This weekend the Times had a story looking into whether New York City real estate has mostly recovered from the slough of despond we found ourselves in following the financial crisis in late ’08. As is well known, there’s always been some New York exceptionalism at play—the city came late to the national real estate…
This weekend the Times had a story looking into whether New York City real estate has mostly recovered from the slough of despond we found ourselves in following the financial crisis in late ’08. As is well known, there’s always been some New York exceptionalism at play—the city came late to the national real estate bubble bursting, and while many development projects stalled out and buying and selling were nearly frozen for a good chunk of 2009—the city didn’t have to deal with the troubles that plagued and continue to plague places like South Florida, Phoenix and Vegas. What the Times story looks into, though, is whether we can now say that we have hit recovery, full-stop, because buyer confidence is back. The anecdotal evidence offered on the “yes” side is: Bidding wars for a few properties; the spigot opening up for construction lending a bit more; more mortgage applications; and that rare condition known as “broker confidence.” On the “maybe-we-can’t-say-recovery-just-yet” side, the article notes that the less-than-stellar economy in much of the country can always find a way to affect New York, and brokers report that while there are a lot of people out looking to buy these days, many are still shy about pulling the trigger. Here’s the bit that stood out with reference to brownstone Brooklyn:
Meryl Blackman, the agent at Halstead Property representing the owners of the Cobble Hill town house that drew 14 offers, said the limited number of single-family town houses available in brownstone Brooklyn had definitely helped prompt the multiple bids. “We had more kids and pregnant moms waiting to get into the open house than I’ve ever seen,” she said. Many of the offers were above the $1.875 million list price. Ms. Blackman sat down with the owners, James and Ann Raimes, and went through each one, beginning with the lowest bid. She started reading heartfelt letters from prospective buyers explaining why the house was ideal for their young families. “But I burst into tears at one point and told her to not read any more,” Ann Raimes said. Along with limited supply, pent-up demand may also be driving the new activity. When the financial crisis hit, buyers held back, waiting for the market to hit bottom. More recently, they waited in anticipation of a double-dip recession. “But now people are realizing that while the economy may not be as strong they want it to be, the big fear of it collapsing has gone by the wayside,” said Frans Preidel, a vice president of Brown Harris Stevens.
We could have liked to see more discussion in the article about just how tough it is for a lot of people to get mortgages these days, but it seems to us that the Brooklyn market is doing well, and the long-term outlook seems quite good. So are we ready to say “recovered,” or not?
Buyer Confidence: Portent or Blip? [NY Times]
Reading about all of this stuff is really fun, but it truly doesn’t reflect how most people live in this city. Treating a home, something that is a basic necessity for everyone, like an instrument of profit and gain is a big mistake. It’s disgusting really. So to make comparisons year to year, as if the horse trading will go on forever, is nonsense. There is too much luxury development, there are too many high- stakes brokers, too many cable t.v. shows devoted to the mania. The word “upgrade” has become common usage when referring to a kitchen. As if it’s unacceptable to use a stove that’s the wrong color to cook your food. Reality Check.
its true, you would have to 1) be pretty out of touch to cry for someone buying a 2 mil house (pls take trip to a 3rd world country) and 2) pretty gullible to not know that its a sell job by selfish privileged people. OTOH, you will see the same BS at bonus time people making $500-1.5mm bonus with the same bogus plea about their 3 children to their bosses. as they say, “only in new york”!
i see people who can afford to buy who are buying. that seems like a good sign. any market exuberance is still rational, that is something to build upon. sure, if mortgage rates going to 10% it will put the brakes on, but it appears trashing the dollar is a much preferred route in washington.
yes, single people buying studio and 1br’s don’t “need” to buy and haven’t been motivated. I expect some more come back given some of the slight rent to buy cost compression. OTOH, people having kids can’t buy time so freely so there is no catch up needed. That’s full steam ahead.
BTW i’ve always disagreed with Jonathan Miller’s “forecasts”.