We’ve heard a number of lifelong renters in New York make the same complaint. When will we see the big housing declines like they’ve had in the rest of the country?
Sure, the market’s been shaky in New York, but we really haven’t seen the collapse that they’ve had elsewhere. That looks set to change, according to a new report from Miller Samuel Real Estate Appraisers, cited by the Journal:
But the average prices of units that are under contract but haven’t yet closed declined 20% since August 2008, a rapid reversal, according to Miller Samuel Real Estate Appraisers, which co-wrote one report with Prudential Douglas Elliman, one of the city’s largest residential real-estate firms. Those sales should close during the first quarter of 2009. A separate report by the Corcoran Group found that transactions in the fourth quarter fell by as much as 53%.
“The Manhattan market … has clearly entered a new period of lower sales activity and overall declines in prices,” said Jonathan J. Miller, chief executive of Miller Samuel.
One sure sign of steeper price cuts to come: The inventory of homes for sale was up 39% in the fourth quarter from the same quarter a year ago. Real-estate brokers said the Manhattan market slowed sharply in mid-September, when credit markets seized up and Lehman Brothers filed for bankruptcy. Since then, inventory has soared as buyers have become more selective and more willing to wait for a good deal.
Again, bad news for owners, but potentially good news for renters hoping to one day make the jump.
Who else loses? Seeking Alpha editor Judy Well intelligently notes that homebuilders like Hovnanian (HOV) and Toll Borthers (TOL) have taken their show to New York over the past several years, and will be hit hard if they can’t fill new developments:
The Brooklyn Paper is sceptical about Toll’s projects there:
If we had such a thing, the award for cajones of the year could easily go to Toll Brothers. A developer best known for suburban McMansions, the company is moving forward with a plan to build posh housing along the fetid Gowanus Canal. [Brooklyn] area residents say the proposal is too big and too risky so close to the canal.
Toll is even experimenting with a different sales model as the Manhattan satellite markets continues to slide:
[Since] the credit crisis and the meltdown on Wall Street, sales traffic… began to slow down, and today about a third of [the Brooklyn] condos remain unsold. Faced with the prospect of empty units and static cash flow, just as sales were starting on an even larger sister tower — Two Northside Piers — the developer, Toll Brothers, decided to take a different approach and expand a program used elsewhere in the country that allows prospective owners to lease with the option to buy, using part of the rent toward the purchase.
Toll is easily among the healthiest of the homebuilders, in part because it was more conservative with their cash during the boom, but also because it’s less concentrated in subprimeville. But with new NY developments not yet open, and the diminished end-of-year Wall Street condo buying not happening as much, this is going to hurt.