Filled-up open houses left buyers at a disadvantage during a strong selling season that lasted the bulk of the year through August. But, according to brokers, the late summer credit crunch has brought on a quieter autumn, taking a little of the swagger out of the seller’s step. So who has the upper hand these days, buyers or sellers?
While third-quarter data revealed average prices at new highs, rising slightly from the quarter before despite a national slowdown, Manhattan’s residential sales brokers are reporting a market shift in the buyer’s favor.
“Ever since the end of the summer the market has been on pause,” says Daniel Berman, sales manager and executive vice president at Bellmarc Realty. “Open houses are quieter; there are not as many bidding wars. The psychology has changed just a bit.”
“For the past month and a half we’ve started to see some effect coming on the heels of the mortgage crisis,” says Jorden Tepper, director of sales for Manhattan Apartments and Manhattan Lofts. “It’s harder to get a loan than it has been in the last two years. The pool of buyers has been narrowed.”
This lies in stark contrast to the situation of recent months. Only a year ago, brokers recall, upward momentum in the Manhattan market meant that owners could overprice their apartment and wait for the market to catch up with it.
“A seller who had priced their property 10 percent above the market in October would find it was pricedécorrectly come February,” says Richard Grossman, executive director for the Downtown offices of Halstead Property. “Right now, it’s not a good market for overpriced property. I don’t think the market is going to move to catch up with that kind of price.”
But that is not to say that prices are about to start depreciating. While third-quarter data is a lagging indicator — representative of deals negotiated in the first and second quarters, prior to the credit crunch and mortgage crisis — they do demonstrate the resilience of the Manhattan residential market, which has remained strong in the face of the national housing slump.
According to Gregory Heym, chief economist at Halstead, prices will continue to appreciate in Manhattan, although the rate at which they do so may slow down.
“We’ve had a few years of incredibly high price growth of about 20 to 30 percent,” says Heym. “This is not a healthy rate. If things get too fast, people get priced out of the market and uncertainty builds up.”
Now that the threat of rapid price appreciation has dissipated, brokers report that negotiations are taking longer to conclude. Buyers are building up confidence in what was only recently very much a seller’s market.
In Manhattan’s diverse market, however, changes in residential sales activity are by no means uniform across all segments. The high end of the market, for example, has been significantly less affected by mortgage or credit concerns, as deals are often closed with cash payments.
“Just like there isn’t one national market, there isn’t one Manhattan market either,” says Heym. “There are many different segments that make it up, and they don’t all move in the same direction at the same time.”
And while bidding wars are not prevalent in the market as a whole, they are still occurring on well-priced properties. John Wollberg, executive vice president and founder of Atco Residential Group, said he recently saw four offers taken at the initial open house for a one-bedroom condominium on the Upper East Side. Four days later, it was sold for more than the asking price.
But brokers warn that these days, the less competitively priced properties are likely to sit on the market for some time, and it is the flexible owner who will see a quick sell.
“Sellers are more negotiable now,” said Reba Miller, founder of brokerage firm R.P. Miller & Associates. “Before, sellers were naming their price not only to the buyer, but also to the broker.”
“In the last few years, buyers have paid premiums,” said Wollberg. “I don’t see that on the market now. Sellers are pricing more to point and allowing room for some negotiations.”
While the buyer may have more leverage now than over the last year, most brokers still stop short of describing it as a buyer’s market, as offers significantly under ask are not being accepted.
Buyers may be driving a harder bargain, said Berman, but “supply is still tight.”