Housing Inventory Ends Year Down 22%

There were fewer homes listed for sale at the end of 2011 than in any of the previous four years, a positive sign for the housing sector.

But appearances can be deceiving, and it remains to be seen whether the drop is the beginning of a real recovery or if inventory is being held down by sellers waiting for prices to pick up and banks moving slowly on foreclosures.

The 1.89 million homes on the market at the end of December represented a 6% decline from November and a 22.3% decline from one year ago, according to data compiled by Realtor.com.

Low inventories are an important ingredient for any housing recovery because prices could firm up in markets that have worked through their inventory.

Still, some real-estate agents aren’t celebrating because there’s a large backlog of potential foreclosures that haven’t yet been taken back and listed by banks. The inventory declines are particularly pronounced in certain states where banks have sharply slowed down foreclosures to correct document-handling abuses.

Moreover, some sellers have pulled their homes off the market to wait for a turn in prices, and that “pent up” demand from sellers could keep inventories higher once prices do rise.

Inventories were down for the year in all but one of the 145 markets tracked by Realtor.com, with Springfield, Ill., posting the only year-over-year inventory gain. The largest declines were recorded in Miami (-49.7%), Phoenix (-49.1%), and Bakersfield, Calif. (-46.6%).

The Realtor.com figures include sale listings from more than 900 multiple-listing services across the country. They don’t cover all homes for sale, including those that are “for sale by owner” and newly constructed homes that aren’t always listed by the services.

Nationally, median prices were down by 1% from November but up 5% from one year ago. Asking prices rose by 32.5% in Miami last year, with big increases in other Florida markets that include Naples (21.7%), Fort Myers-Cape Coral (21.5%), and Punta Gorda (19.4%).

Median asking prices fell from year-earlier levels in Detroit (-11%), Chicago (-10%), Las Vegas (-7.6%) and Sacramento, Calif. (-7%).

Inventories traditionally decline in December as sales slow during the holiday season. Listings have declined by 11% in December over the past 29 years, according to research firm Zelman & Associates.

Source: The Wall Street Journal - By Nick Timiraos

Manhattan Residential Sales Prices Down Slightly

Jan. 4 (Bloomberg) -- Manhattan apartment sales fell 12 percent in the fourth quarter from a year earlier as Europe’s debt crisis and sluggish U.S. job growth dimmed buyer appetites.

Purchases of condominiums and co-ops declined to 2,011 from 2,295 in the fourth quarter of 2010, New York appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said in a joint report today. The median price of units that changed hands in the final three months of 2011 climbed 1.2 percent from a year earlier, to $855,000.

“Consumers paused to see how things play out with all the information that’s coming at them right now,” Jonathan Miller, president of Miller Samuel, said in an interview. “Europe, the impasse in Washington over economic policy, the stagnant nature of the economy -- there’s a lot of conflicting economic news, and if you’re on the fence, maybe you wait a little bit.”

Financial firms globally disclosed plans in 2011 to eliminate more than 200,000 jobs as they grapple with market turmoil, fallout from Europe’s sovereign-debt crisis and concerns that U.S. economic growth will slow. Morgan Stanley told regulators last week that it may dismiss 580 employees in New York City as the bank cuts 1,600 jobs.

New York City’s unemployment rate was 8.9 percent in November, up 0.1 percentage point from the previous month and higher than the national average of 8.6 percent, the state Department of Labor said Dec. 15.

StreetEasy Report

“Job security is No. 1,” said Sofia Song, vice president of research at StreetEasy.com, a property-listings and data website that also issued a report on Manhattan apartment sales today.

Purchases of condos and co-ops in the borough fell 19 percent in the fourth quarter from a year earlier to 2,403, according to StreetEasy. The median price dropped 9.1 percent to $750,000.

“It’s just really reflective of the economic climate,” Song said in an interview. “The economy is really volatile and people were just paralyzed to enter the market.”

Three other reports also showed declines in sales volume and median price for the three months ended Dec. 31.

Brown Harris Stevens and Halstead Property LLC said completed condo and co-op purchases fell 13 percent from a year earlier. The median price slipped 6.5 percent to $785,000, according to the brokerage firms.

2010 Rush

In the fourth quarter of 2010, sellers were in a rush to complete deals amid concern that capital-gains taxes for top earners would rise on Jan. 1, according to Hall Willkie, president of Brown Harris Stevens.

It “was our greatest year in history” in 2010, Willkie said in an interview. The risk of a tax increase “was very much a factor that did not exist in 2011,” he said.

Corcoran Group said sales tumbled 12 percent from the fourth quarter of 2010, and the median price dropped 5 percent to $795,000.

Purchases of luxury apartments, defined as the top 10 percent of all sales by price, declined 13 percent to 201 deals, according to Miller Samuel and Prudential. The median price of those transactions dropped 4.6 percent to $4.15 million.

On the Upper East Side, the median price of existing co-ops climbed 4 percent from a year earlier to $840,000, according to Corcoran. Condo prices in the neighborhood were little changed at $940,000. On the Upper West Side, the median price of co-op resales fell 1 percent to $825,000, while existing condo prices dropped 5 percent to $1.1 million.

Bloomberg - By Oshrat Carmiel

Rudin locks in $525M construction financing for St. Vincent's

The Rudin family's $800 million redevelopment of the St. Vincent's Hospital site is one step closer to a reality. According to the Wall Street Journal, Rudin Management obtained $525 million in construction financing and can begin construction once the government approval process, already underway, is complete. 

The relative ease with which the Rudin's cleared the financing obstacle given today's tight lending environment was surprising, the Journal said. Bank of America, JPMorgan Chase, Bank of New York Mellon and M&T Bank contributed to the loan. 

But that last hurdle, government approval, could be the highest. 

The City Council may respond to pressure from Village residents and demand more concessions from the developers for the right to proceed with building. The Rudin family has already reduced the height of the development from 266 feet down to 203, agreed to renovate existing structures rather than replace them, provided a 15,000-square-foot park in the plans and teamed with North Shore-LIJ to build a 24-hour medical emergency department for the community. 

"We think that we have responded in a very positive way to all the concerns that have been expressed to us before," Rudin said. But the community still wants a smaller structure and affordable housing to be included in the plan. 

Rudin bought the site for $260 million, and crafted plans for 450 luxury units among four towers and a row of five townhouses, a playground, an elementary school and the medical facility. [WSJ]

Source: The Real Deal

New York Exceptionalism

American debt has been downgraded. Has Manhattan real estate? A data-driven review.

We know the eurozone is barely hanging on, job reports are terrible, and nobody’s hiring. What we don’t know—because it typically takes a few months to become evident—is what all of this means for New York real estate. Is this a moment to buy? To sell? To panic-sell? In the weeks after the Standard & Poor’s downgrade, we asked a wide range of brokers, analysts, and executives to size things up. As you’d expect, they more or less fell into two camps—the ups and the downs—but their opinions tended to funnel down to one conclusion.


From the optimists: “In my opinion, we’ve already come off the bottom,” declares Barbara Corcoran, founder of the Corcoran Group and commentator for the T­oday show. She says newcomers are still pouring in, especially from China and Brazil, and that those wealthy buyers are indifferent to the downturn. She’s backed up by Victor Calanog, chief economist at the analytics firm Reis, who’s seeing “large transactions that seem to defy gravity.” (A penthouse just sold on First Avenue—that’s First, not Fifth—for $11.025 million.)


Noah Rosenblatt, proprietor of Urbandigs.com, relies on transaction volume as a strong indicator. He reports that the 30-day moving window of contracts signed is steady, at a little over 600. After Lehman Brothers folded, that number stayed below 500 for four months; at the peak, it topped 1,000. (Rosenblatt also monitors new listings and sees no flood of desperate sellers.)


Anecdotally, too, things have been okay. “We’re right on our numbers from last year, and last year was our second best in history” in transactions and dollar value, reports Halstead president Diane Ramirez. She agrees with Rosenblatt that listings inventory is encouraging. Right now, her internal data show about 7,200 properties available—about a seven-and-a-half-month supply. In bubble times, that figure was about three months, and in the worst days of 2008 and 2009, it was more like a year’s worth—two years’, for high-end properties. New developments aren’t crowding the market, because financing has dried up, so there’s little worry of a glut.Contracts aren’t being canceled much, either. According to StreetEasy.com (supplier of the three bar charts above), 44 went bust in Manhattan last month compared with 51 in August 2010; the number of new contracts is essentially the same, with 660 this August versus 651 in the same period last year. Foreclosures, too, are on the wane, per PropertyShark.comdata (see graph).


Finally, we checked on the banks. Jumbo lenders—those who offer the big loans needed to buy in New York—are returning to the marketplace. Several institutions that made themselves scarce two years ago have returned, says Melissa Cohn, president of the Manhattan Mortgage Company. Others are banks who’ve “never done jumbos and are doing so now.”


But buyers may have their chance too: Just because New York real estate has done well so far doesn’t mean it will hold on. Job growth has been weak, and there are a lot of rumors about Wall Street layoffs. “Long-term volatility will paralyze a lot of buyers,” predicts StreetEasy research director Sofia Song. You can see that in the popularity of rentals: StreetEasy’s traffic usually peaks in spring, says Song, but this year, for the first time, August has been the busiest month, “and that was due to the rental traffic.” Vacancies are down to one percent; rents are rising. Rental buildings are selling well, says Robert Knakal of the commercial-real-estate firm Massey Knakal, and banks are eager to finance those deals. “That might spell some diffidence for the sales market,” says Calanog.Though the Fed is keeping rates down until 2013, analyst and appraiser Jonathan Miller thinks “the benefit has played out.” If you were waiting for a low rate, you got one. Getting a mortgage is no easier, adds Calanog: “Banks are still reticent.” And though more banks are writing jumbo mortgages, the rules will change in October: Jumbos will start at $625,500 instead of the current $729,750. That means buyers who want to stay under the jumbo cap (where interest rates are lower) will have to come up with the difference—always a challenge.The consensus: Nearly everyone had the same conclusion: This is no crash. Rosenblatt says, “There’s a certain pause in the market that wasn’t there in May … but it’s nothing like post-Lehman. It’s just not.” Calanog predicts a “soft crawl upward,” with prices inching from $1,000 to $1,050 per square foot: “Because everyone is tempering their expectations, I suspect people will be surprised at how okay things will be.”

By By S.Jhoanna Robledo - The New York Times

July Manhattan Market Update:

 Lets get right to the freshest data available on the pace of new supply and the pace of newly signed contracts to see how the Manhattan market performed in July compared to both the prior month and the year ago period.

First, lets look at the pace of new supply coming to market on a monthly basis:



Conclusions: This is now the 10th consecutive year-over-year monthly decline of new supply to hit the market. If it feels like there is not that much new supply out there, your right. The data shows that the current pace of fresh, new listings hitting the Active marketplace right now is way down from both last month, and the same period last year. Inventory remains tight which means there is even less high quality product out there that is priced to sell quickly. This is adding to downward pressure on inventory levels right now.

Second, lets look at the pace of new contracts signed on a monthly basis:



Conclusions: We saw a big drop in new deals signed in July, to 713. This is down from 988 last month and mostly in line with July 2010's total of 760. Seasonality is likely the main reason for this after seeing 4 consecutive months of between 950 - 1,150 new deals signed. Its not easy to sustain 950+ new deals signed, especially with less product coming to market each month; as evidence by the first chart above. We should expect a tick down in new demand as we get into July & August and we are seeing that right now. It happens to be occurring as equity markets get hit with fresh fears of a possible economic slowdown - so I can understand why some out there think this might be a sign of a new slowdown to hit the Manhattan market. It's just too soon to tell considering the strong levels we are coming from the past 4 months.

Finally, here is a 1QTR view of Manhattan Pending Sales vs Active Inventory:



Conclusions: Both pending sales and active inventory levels are down around 9% over the past 3 months. The only metric seeing a relative uptick from a few months ago is Off-Market trends; which makes sense given this time of year. Usually as we enter the slower summer months, the pace of listings being removed from the active marketplace rises; and off-market trends are showing that right now. So, active inventory is being pressured to the downside by two main elements:

1) less and less new product coming onto the active marketplace,
2) rising off-market trends as sellers take active listings off the marketplace

A declining pending sales should be an upward pressure to supply, but the above noted two elements clearly are overpowering the downtick in new demand the market is seeing right now. Active inventory is also exposed to frequency with which brokers update their listings, as the UrbanDigs platform implemented a rule that only counts a listing as 'ACTIVE' if the exclusive listing agent regularly maintains the 'actv' status internally; if the agent doesn't update in 30 days, the listing is dropped out of our count of active inventory. So, we could also be seeing a rising # of listings going stale that could also be pressuring supply to the downside. 

Great article about how different and ahead of rest of the Country the Real Estate market in New York City is. Prices going up... Multiple offers... Yap! It is real here!!


In New York, a Sprinkling of Higher Prices

In New York, a Sprinkling of Higher Prices

Hiroko Masuike/The New York Times

BEFORE the financial markets’ most recent drubbing, New York City’s real estate prices had been flat for the better part of a year. But over the spring and summer, prices in certain pockets of property sprinkled around Manhattan and Brooklyn had rebounded to or beyond pre-recession levels.


Read the article: In New York, a Sprinkling of Higher Prices

By VIVIAN S. TOY, New York Times

Published: August 19, 2011

Brazil, Fourth Largest Holder Of U.S. Treasuries, Will Maintain Foreign Reserves In Dollar

Brazil has no plans to sell U.S. Treasuries or change its foreign currency reserves holdings as a result of Standard & Poor’s downgraded U.S.’s credit rating,according to Bloomberg.

As of August 4th, Brazil holds $348 billion in foreign currency reserves, 35% more than in the same period in 2010. About 60% of this total, or $211 billion, is held in U.S. treasuries. Hence, Brazil is the US’s fourth largest creditor, only behind China, Japan, and the U.K.

Since Brazil is such a large creditor, it is in Brazil’s interest to enforce the idea that even though U.S. treasuries are no longer “risk free”, they are and will still be perceived as safe havens. Therefore, Brazil will try to send the following message to the market: Standard & Poor’s downgrade of the US.’s credit rating is only an additional dramatic element but it doesn’t really have a large influence in the current global crisis.

Guido Mantega is Brazil’s finance minister. Following the US's credit rating downgrade, I am expecting polemic declarations from the author of the term "currency war." (Image by Reuters)

On the other hand, some believe that the downgrade marks the symbolic act of the beginning of a new cycle of further uncertainty without the existence of totally “risk free” assets- those that remain classified as such do not provide sufficient liquidity to attend everyone’s needs of safe havens. According to a July report, S&P gives 18 independent entities its highest ranking; examples are Hong Kong, Australia, and the Isle of Man.

Scholarships, jobs and industrial production fell in virtually all countries, a scenario that shows no signs of change in the coming months. Nonetheless, Brazil, according to The Economist, was one of the latest countries to get in the global crisis of 2008 and one of the quickest to bounce back, remains confident it has strong defenses against external crisis. Brazil was upgraded another notch on the investment grade scale this year, disparity between rich and poor is shrinking, and it holds reserves of $ 348 billion.  These factors represent strong defenses against external shocks, at least theoretically. For practical reality, however, Brazil is very exposed. In fact, last Friday Brazil’s stock index plummet, registering the worst performance among the world’s 20 largest equity markets.

Source: Forbes