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Bringing Prices Down Across The Board

A report from Bisnow on New York. “Amid a sliding rental market in the city, Sam Zell’s Equity Residential is looking to sell two of its Manhattan apartment buildings. The REIT is preparing to sell a high-rise tower at 800 Sixth Ave. in Chelsea, as well as a 12-story building at 505 West 54th St. in Hell’s Kitchen, Bloomberg reports. The planned sales are part of a plan to shed holdings on Manhattan’s west side, where a vast number of rental buildings are forcing rental prices down.”

“Outgoing CEO David Neithercut said during an earnings call in July that selling one of the buildings is ‘an opportunity to address the negative impact in our New York City growth rates.’ Net effective rents in Manhattan, which takes concessions into account, declined for the eighth time in nine months to hit $3,310 in August, according to appraisal firm Miller Samuel.”

From Equities.com. “Believe it or not, there are deals to be had in the highly competitive Manhattan real estate market. This is because the market just posted its worst quarter in the decade since the financial crisis. The falling prices and rising inventory have even led to the unbelievable – prices for office space for rent in NYC have fallen.”

“What makes this ‘dip’ in prices unique is that it comes at a time which the stock market – an indicator in the health of the financial services industry which is a major employer in Manhattan – has been setting new highs.”

“There is evidence to suggest that the market is in the midst of a reset, one which is indicative of today’s price conscious buyers. This is even true in the luxury sector where the number of new condo units under construction has been bringing prices down across the board.”

“In fact, so much inventory is coming onto the market the report from Douglas Elliman and Miller Samuel noted that there is now a 16-month supply of luxury units alone. While Manhattan is known for its luxury properties, it is highly unusual for so many properties to be on the market or coming onto the market and this could be an indication of developers mistiming the economy.”

From The Real Deal. “The Sherman Fairchild Mansion is back on the market for $35 million — after a $5 million price cut and changing brokers. The 25-foot-wide townhouse at 17 East 65th Street, which made a cameo in Woody Allen’s ‘Hannah and Her Sisters,’ spans 9,440 square feet, the New York Post reported.”

From Curbed Hamptons. “After about a year and a half on the market, the home at 550 Parsonage Lane in south-of-the-highway Sagaponack has received its first price cut, bringing the listing from $24,995,000 down to $19,995,000.”

“Even after the $5 million price cut, the 10-acre property is still the most expensive single-family home available on Parsonage Lane, followed by the contemporary estate at the 289 address seeking $17.95 million. It is surpassed only by a three-property compound listed for $59.9 million.”

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This Post Has 46 Comments

  1. ‘Even after the $5 million price cut, the 10-acre property is still the most expensive single-family home available on Parsonage Lane’

    I’m looking at the photo and it’s nice, but they are out of their cotton pickin’ minds if they think that shack is worth $20M.

  2. BTW, please let me know if the comments log-in is auto-completing now. We changed some settings about cookies that may fix that.

    2. Yes, the auto save for user ID is working well. Thank you for the update. It is interesting you’ve updated the whole blog format in part to better accommodate cell and tablet users. I remember the first time I used my cell to read and comment on the HBB, probably around 2012 or so……and now, 95% of my interactions are from my phone!

  3. Dang, I was looking around that last link and found more slashin’.

    ‘After coming on the market in May and having a contract signed in August, the oceanfront home at 79 Surfside Drive in Bridgehampton has sold for $18.8 million—which is nearly $3 million under the original $21.5 million asking price. ‘

    1. “… this could be an indication of developer$ mi$timing the economy.”

      Daffy: “that’$ de$$$$piiiiicable!”
      Bugs: “eh, could be.”

  6. In the spirit of “everyone’s a critic” –

    Does anyone have tips for reducing the font size on my screen (ipad mini)? Maybe a plugin for Safari or something? On my screen the font looks to be about size 18, and it’s impossible to scan quickly and just difficult to read in general.

    Also, Ben, would you consider showing the whole post on the homepage rather than only the first few lines? Seeing the week’s whole posts together on the homepage was very impactful on the old blog, especially considering how many posts reference multiple stories. It was also helpful when looking for a specific post from a few days before, rather than clicking on each one and going through.

    And thanks for changing the colors back to the classic yellow and white, so much easier on the eyes!

      2. It’s better, thanks for the quick fix!

        Just personally, I would prefer an even smaller size font due to the large amount of info per post (easier to scan). But I understand for mobile-friendly it might not be best to go smaller. Just fyi, on my screen the old blog was probably a size 8 font, very tiny but then each user could zoom to his/her preference. After your fix, the new one here looks like about a 12 or 14 on my screen, which again is definitely better than yesterday, so thanks for that!

    3. Must be an Apple issue, as the font size is perfect for my phone and works perfect on my HP laptop as well.

      1. I just checked on my Android phone and the font still looks big-ish to me (compared to old blog), and it looks the same on Apple/Android to my eyes. But maybe many people prefer bigger fonts. I’m a sucker for dense paragraphs of tiny text. As Justme said a few days ago, there is a lot of white space which comes at the expense of compactness. That is probably making the font seem bigger than it is. But it’s definitely better than yesterday!

  7. ‘Amid a sliding rental market in the city, Sam Zell’s Equity Residential is looking to sell two of its Manhattan apartment buildings. The REIT is preparing to sell a high-rise tower at 800 Sixth Ave. in Chelsea, as well as a 12-story building at 505 West 54th St. in Hell’s Kitchen, Bloomberg reports. The planned sales are part of a plan to shed holdings on Manhattan’s west side, where a vast number of rental buildings are forcing rental prices down’

    If Sam had read this blog I could have saved him a few billion$.

    1. What’s surprising is that Sam is still selling into such a glutted market. He was unloading properties years ago, and continues today. This does not suggest confidence in prices over the course of the next decade, because he’d sit tight if he thought it was worth riding it out.

      If I recall, his properties were purchased on the cheap, many years ago, so if anyone is realizing favorable cap rates it is him. Sam is trying to cash out because he realizes the getting will never be so good again.

    2. Equity sold much of their real estate in 2006, ahead of that downturn. If Zell is selling today, it’s a good indicator of a peaking market. Just ask Hines out of Dallas who invested the last decade trying to unwind their stupid overpricef purchases of Equity properties.

  8. Ben,
    If you don’t mind the feedback on the new design, there are a couple things I wouldn’t mind seeing tweaked, or made an option.

    One is the font size – I’m assuming it’s so large for someone reading on a 4-inch phone screen. Can the site auto-detect a desktop browser and revert to the old font size? The information density is only about half that the old site (taller lines, fewer words on a line), and that translates into at least double (if not more) the vertical scrolling.

    Also, the overall contrast levels in the color scheme are lower. the word ” > Uncategorized > ” at the top is almost invisible, and the RGB delta between text and background is a lot less. If someone has a badly calibrated or crappy TN monitor, some text will be almost invisible.

    Are you going to setup topic categories, or is that just an artifact of the new blog software?

    I do miss the boxes and alternating background colors around the comments in a thread – easier to visually parse at a glance the size and separation of threads.

    Now I’ll admit i’m old school, and think most of the current web design trends are overall worse than what we had before, just to put my biases out there.

    And I know it’s a lot of work for you just be doing what you’ve done, so don’t take it as me being ungrateful.

    1. I understand and appreciate the feedback. Most of the changes we’ve made were based on that. I just set the font back to default. I will be making other adjustments for a while including some of the stuff you mentioned.

    2. My thoughts on the layout are pretty similar, some expressed already: Need more vertical density/compactness, more clear indentation of comments (vertical density will help on that, too). Fonts I have been adjusting manually (control-mouse2scroll in Firefox) . Contrast has been fixed in comments, but not everywhere. Very happy to get the yellow bg back.

      1. Agree with everything, MGSpiffy and Justme. Well said. Especially the part about appreciating all the work that has gone into the new blog so far!

  9. “While Manhattan is known for its luxury properties, it is highly unusual for so many properties to be on the market or coming onto the market and this could be an indication of developers mistiming the economy.”

    If Manhattan ain’t special, ain’t no place special.

  10. Love that I do not have to type my name in each time. I do not think the Fed is going to be quite so eager to bail out the FBs this time since Trump is on office and the globalists do not want him to succeed. Nevertheless, we are looking at around 4% growth this quarter. Listened to a real estate show on the radio in ABQ. It said that people that have had a chapter 7 bankruptcy can get a mortgage within two years. I find it hard to believe but if so it explains why they said housing sales were strong in ABQ. It is a lot like last time when the bubble started to pop on the coasts, the bubble picked up momentum in New Mexico. Actually, I know someone who just sold property in SF and bought in Santa Fe.

  11. From a comment on ZeroHedge (that seemed credible):
    This is nothing like the bust of 07/08. I do analytics for a large firm that all we do is run the umpteen amounts of data we have for housing and commercial real estate nationwide.

    That said, it doesn’t mean it couldn’t turn into that. Were not close to that though. And banks have little to do with the issues we see. It’s brokers / fin tech / and the good ole .gov’s of the world driving this. So do I believe we’ll see issues again? Certainly possible if not probable.

    Pricing his higher because of below average inventory in most markets (folks simply arent moving at the same rate they were back then — that could change of course). In a lot of significant markets inventory is WELL below average. That’s whats driving the pricing being up. But the slow down is interest rates. Mortgage rates are well up from the “recovery” (if you call it that).

    While we are not there now, the .gov’s are pushing Fannie and Freddie as hard as they ever were. Blowing them up (or limiting them the way Dodd/Frank did with commercial banks) would have been smart. But .gov’s love there six figure jobs and vote buying. So that’s not what is happening.

    The unsecured loan market (not mortgages) are going to be the first to start blowing up. Those are already leaking.

    1. Sounds like somebody who doesn’t have a clue. The problem last time was the HIGH HOUSING PRICES which are not supported by fundamentals (read wages) and the resultant debt. The problem this time is exactly the same.

      Once housing prices reverse course, the carnage begins. Loans fail, companies fail, jobs are lost and the whole thing feeds on itself. This time may be worse, because debt is even higher and there are massive student loan and subprime auto loan balances.

    4. “all we do is run the umpteen amounts of data…”

      It’s really pretty simple Mike. Prices are too high.

    1. Musk certainly is delivering EVs, and in a big way:
      https://insideevs.com/monthly-plug-in-sales-scorecard/
      What Musk hasn’t delivered (yet) is profits. Will Tesla ever? End of Q3 will tell us a lot on that front.

      CNG cars are interesting, but ultimately be a footnote in the transition from internal combustion to EV. You of anyone should know that China flexing its muscle will only hasten the transition to EVs. 1.5 billion Chinese are choking on their air pollution. China has mandated that any legacy producer wanting to sell to its consumers will have to invest massively in EVs and eventually only sell EVs. A lot of EV early adopters will not have near the effect of China putting it’s finger on the scale in favor of EVs.

      1. EVs are a perfect example of doing less work with a higher cost and energy input. Only a world on a credit binge can afford to be so silly.

        1. EVs have a higher upfront cost, but a much lower total cost to own over the life cycle of the vehicle, especially when considering the cost to maintain a huge gas network and the American military might expended to protect oil oversees. And when it comes clean and energy efficient, it’s not even contest. No honest debater can argue those points. You might as well be arguing that cigarette smoking doesn’t cause cancer.

          1. “EVs have a higher upfront cost, but a much lower total cost to own over the life cycle of the vehicle, ”

            Incorrect.
            Electric car cost/mile is 38% higher than internal combustion vehicles, directly attributed to the fact that they continued running long after electric vehicles fall apart.

          2. Mafia Blocks, you’re not even close. I don’t know where you pulled that 38% stat out from, but it’s wildly inaccurate. Try some good data:

            https://avt.inl.gov/sites/default/files/pdf/fsev/costs.pdf

            Under no scenario does a gas car even come close to the efficiency or the cost of even the most inefficient EV. It is theoretically possible for a hybrid to be more efficient than a very inefficient EV, but only under very specific circumstances such as when electricity costs are quite high (e.g. $.24/kWh). We pay $.05/kWh, and the national average is about $.10/kWh.

            Also, EVs are likely to last twice as long as a gas car. Why? Because there is no engine and way fewer moving parts. The data coming out show that the cost to service and the reliability are incredible. We are talking maybe 500k miles lifetime.

  13. “Net effective rents in Manhattan, which takes concessions into account, declined for the eighth time in nine months to hit $3,310 in August, according to appraisal firm Miller Samuel.”

    The rent is still too damn high!

    1. I bought in 2010. Would have bought a much bigger house if housing prices would have corrected more. However, it is land, and not houses, that is really at bubble prices. The reason ABQ area will not fall much, if at all. Land is still relatively cheap here and makes up a small portion of the overall house price. However, the coastal areas and the trendy places that millennials love so much are about to get a beat down. I might even move back to Flagstaff, if I see a 50% correction. I will retire in about six years.

      1. ABQ area will not fall much, if at all…

        Houses are 5 x family income. Your prediction just might be completely wrong.

  16. “What makes this ‘dip’ in prices unique is that it comes at a time which the stock market – an indicator in the health of the financial services industry which is a major employer in Manhattan – has been setting new highs.”

    What this illustrates is the growing disconnect between the Fed’s Ponzi markets and asset bubbles, created by $15 trillion in fake Bernanke/Yellen Bux, and the deterioration in the real economy, which has been systematically looted by the Fed’s oligarch partners in crime. Real people who have seen their wages stagnant since the ’70s while the Fed’s debasement of the currency erodes their purchasing power cannot afford to pay the extortionate rents greedy landlords are demanding for housing and business spaces. Something has to give as the parasites are killing the productive host.

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