Condo and co-op inventory continued to drop in Manhattan in February, creating bidding wars, disgruntled buyers and stressed brokers, but possibly helping the rental market.
Corcoran released a report early last month saying that inventory of properties for sale is down 50 percent compared to a year ago, according to data from its house listing system.
Warburg Realty president Frederick Peters also painted a grim picture of listings in mid-February.
“By our own calculations, we have 63 percent the number of active exclusives as we had a year ago,” Peters said. “It’s not because brokers forgot how to sell real estate. There is just no inventory.”
According to Jonathan Miller, president of the appraisal firm Miller Samuel, the number of condos and co-ops for sale in Manhattan dropped 11 percent between the end of the fourth quarter and the end of January. There were 4,321 properties listed at the end of the January, compared to 4,843 at the end of the fourth quarter.
“Everything is going to some form of competitive bidding,” said Peters. “Every good property is mobbed.”
Daren Hornig, president and CEO of Dwelling Quest, said buyers are now forced more than ever to act quickly, and Peters said many were growing disgruntled.
“Anyone buying now has usually been burnt one to 10 times before, so they are often afraid miss a deal,” said Hornig.
“A year ago it was sellers who were disgusted,” said Peters. “Now, it’s moving into buyers being disgruntled.”
The low inventory is also making brokers “a lot more stressed,” Peters said.
Things got heated recently over sales at a new project at 505 Greenwich Street, when Elliman broker Michael Schvo and Christopher Mathieson, managing partner at J.C. DeNiro, accused Corcoran of blocking them from showing its exclusive listings at the new development. Mathieson also said Corcoran refused to sell him an apartment in the building solely because he was a realtor.
Corcoran said the allegations were false and exaggerated. CEO Pam Liebman pointed out that it is customary to first offer apartments on a “priority list” created by the developer, and REBNY officials pointed out that the 72-hour rule doesn’t apply to properties on the market for the first time.
Corcoran also filed a complaint against Mathieson with the ethics committee of the REBNY, which Mathieson acknowledged receiving. Neither side commented on the details of the complaint.
The shortage of sales inventory has had the effect of helping the rental market, according to Andrew Heiberger, CEO of Citi Habitats.
“The rental market is 100 percent coming back on all fronts,” said Heiberger. “When the condo market goes crazy, people priced out of the market have to rent.”
Heiberger said vacancies in the rental market, which had reached as high as 5 percent in the last two years, had been hovering around 3.7 percent for while, and were now down to around 2 percent.
Gary Kiyan, listings and systems manager for DJ Knight, said the rental market was improving, but that “it isn’t as if anyone flipped a switch”
“I’m encouraged by some of the things I’m seeing,” he said. “We’re seeing more activity.”
But he said he was concerned that there are still alot of new rental developments coming online soon.
Heiberger said the improved situation means owners are starting to remove incentives for renters. “That’s the first thing peeling away,” he said.
Hornig of Dwelling Quest said owners were becoming less likely to pay commission to brokers, which happens in a weak market.
“A lot of them are paying a month’s commission, but they are pulling back,” Hornig said.