They’re worried about the health of the economy and the state of politics, both local and national. And they’re just as concerned about the rise of disruptors and third-party lead-generation companies. More than 100 people crammed into the lobby of the Elad Group’s under-construction condo on West 43 Street to hear what top residential brokerage executives and agents had to say about it all.
The whiplash between reality and market predictions is leaving many people “starving for information,” according to Shlomi Reuveni, founder of Reuveni Real Estate, who organized and moderated the event. “I have never seen a market like this,” he said. “This is as surreal as it gets.”
While the crowd sipped champagne and picked at a catered lunch, Brown Harris Stevens’ CEO Bess Freedman, Warburg Realty’s Frederick Peters and Modern Spaces’ CEO Eric Benaim debated Donna Olshan, Nancy Packes, Compass’ Kyle Blackmon and Douglas Elliman’s Jacky Teplitzky swapped takes on the health of the market.
“First quarter sucked. Second quarter improved,” said Peters, who pegged the uptick on the introduction of new taxes on residential real estate. He said his expectation is that the market will be flat for the rest of the year.
Freedman said she thought it would be better than 2018, while Benaim maintained that business was good, even despite Amazon pulling the plug on its campus in Queens.
“I think one thing Amazon did for us was put Long Island City on the global map,” he said.
Olshan called June’s record-breaking sales a “false positive,” claiming those deals were going to close in the summer regardless. She also noted that by her calculations transactions are only happening after sellers shave an average of 9 percent discount off their original listing prices. “The data continually tells me we’re overpriced and we need to get the prices down to move,” she said.
Teplitzky called it a “schizophrenic” market, saying that she’s finding there’s “no rhyme or reason” to what transacts. (She did underline a “surge” of buyers from Mexico and potentially Argentina as a bright spot for buyers with some urgency.)
Packes spoke up for rentals, calling it a “very healthy market.” She added that if job growth continued to be strong, rental prices will “skyrocket” as supply is on track to “drop off a cliff” by the end of 2020.
On questions about how a strong stock market and economy has diverged from real estate, Packes said the “thread to follow” was who has built up a lot of debt in a low-interest rate environment and won’t be able to meet their commitments.
Olshan noted that she believed that the elimination of the state and local tax deductions was “the tipping point.”
Teplitzky disagreed. She attributed the slowdown in purchasing to the vast amount of product buyers can choose from, adding that “there is more off the market than on the market.”
However, as Reuveni said, “I see people with a lot of cash,” but they’re still not buying. Why? Blackmon said it’s because buyers are patient to a fault. “There are billions of dollars on the sidelines,” he said, just waiting for a specific product and a good deal.
When a question came up about how national politics may sway the residential market, Packes pointed to President Trump’s trade war with China.
“We’re watching it happen right now. He’s not going to back down because it’s not in his personality, and neither is China. He’s doesn’t understand they’re sitting on $4 trillion dollars to wait out 2020. This is going to be very interesting,” she said. Freedman and Peters declined to weigh in. “We’re not touching this one,” Peters quipped.
On the local level, BHS broker Antonio del Rosario pointed to the political opposition against Amazon, the passage of sweeping rent forms in June, and New York City Council’s package of bills to lower costs (including broker commissions) in rental transactions. (He noted that BHS’ owner William Lie Zeckendorf had hired his own lobbyist to combat changes to the state real estate laws.) Del Rosario asked the brokerage heads what they were doing to protect brokers and their businesses from lawmakers’ taxation and policies.
Benaim said he’s become more politically active since the Amazon deal fell apart and advised the audience to register as Democrats so they can vote in local primaries and influence the candidate pool.
Meanwhile, Peters said he “just had to put a plug in” for the Real Estate Board of New York’s “show of force” at City Hall about a month ago to specifically address the city’s rent bills.
“I think REBNY is taking its role of mobilization extremely seriously, but those mobilizations are only as successful as the people who respond,” he said.
“I don’t think we’re shook up enough,” said Del Rosario after the event. “If they attack the brokering process, we’re dead. Extinct.”