For The Last Time, People Are Not Fleeing New York City!

Much has been made, and much will be made, of 2021 being the highest sales volume in decades.  We are seeing, week after week, extraordinary sales volume, and numbers of deals at the high end of the market.  Donna Olshan’s excellent weekly report has continued its breathless, but entirely accurate, reporting of ongoing, eye-popping sales.  I know- I’m pretty excited, too.

I continue to be shocked at how many people still think that people are leaving Manhattan.  I assure you, this is not the case!!

The new development market is on fire, whether brand new product is fitting buyers’ needs, or whether units that have been on the market are finally finding their right pricing level, and buyers in the process.  This is a good article that covers what’s been going on with some color from Fred Peters.

What has stood out is how condo sales have so dramatically outpaced coop sales at the high end.   For months, the pace has been nearly 4:1 in favor of condos over coops.  This would certainly prompt questions of the value in co-ops today.  My colleague is quoted, thoughtfully, musing on the thinking that co-ops are serious values today.  I happen to agree completely.

I had a recent buyer who was coming into the US to purchase a pied-a-terre.  He was adamant about purchasing a condo in a specific area.  However, seeing how much value there is in coops, purchased something 20% bigger at a 20-30% discount to where condos are priced.  That is, he bought a coop.

I’m hunting apartments, not wabbits!

Most international buyers, however, are not US Citizens, and may be more concerned about having enough US assets to pass co-op boards.  Some other buyers don’t want to renovate or deal with co-op nonsense, strongly shy away from the scrutiny and irritation of these communities.

Further, we are seeing the market surge as buyers are able to enter the market from abroad.  Omicron, or whatever Greek-alphabet-named variant happens to show up to our US shores, may stymie some of this, but in the meantime, international buyers are, as I expected, impacting the market, too.  Read more here.

I have spoken a lot about mortgage rates driving the market.  Inflation seems to finally be visible, and there is no doubt that this is playing a significant role in driving up the real estate and art markets, among other assets.

What About the Sub-$4mm Market for Co-ops?  An Opportunity?

What I’m thinking about is the sub-$4mm market and how these forces are affecting it.  The bulk of the market is well below the four million dollar level.   Our most recent Inventory Report shows that inventory is mostly flat month over month, especially for coops.  Is this a good time to buy?  It feels like a mini-pause in the market for all but the high end.

We haven’t seen the suburban bidding wars, where homes go 20-30% over asking price regularly.  We have simply seen a very healthy market.  As we enter this “holding pattern” between now and the end of the year, where we are not likely to see rising asking prices, nor that much inventory, it becomes a time when buyers should actively work to educate themselves, if not go ahead and make offers and even moves before the new year, when we expect the next phase of the market to kick in.  -Scott