April 21, 2012
Buyer confidence a reality or just a blip?
More than 200 people showed up for an open house at a town house in Cobble Hill, Brooklyn, last month, and the crowd, filled with stroller-pushing parents and young children, was so lively an ice cream truck pulled up.
The house went to contract quickly, after the owners sifted through 14 offers, nearly all of them above their $1.875 million asking price.
Recent market reports show Manhattan real estate prices holding steady, but many signs indicate New York City real estate may finally be willing to stop flirting with recovery and commit wholeheartedly.
To start with, open-house traffic for some properties has reached levels not seen even at the height of the market in 2007 and 2008. Bidding wars and sales above listing prices have become more common.
As a result, a phenomenon absent for years — new development — is budding again in places like New York, Washington, D.C., and even Southwest Florida.
In New York, for instance, this January and February, the number of permits for new units increased nearly 800 percent, to 457 units.
“If you were not cognizant of the underlying state of the American economy and you lived in New York — in this bird cage we call home — you would think everything is just rosy,” said Jeffrey E. Levine, chairman of Douglaston Development, of New York.
Realtors and market analysts alike note Southwest Florida’s residential market, while not as rosy as it was in 2005 and 2006, turned a proverbial corner this winter.
Buyers, especially those focused on upper-end homes, have stopped waiting and have started committing — both on the barrier islands and in incorporated area.
The limited number of new listings and inventory coming to market from Manhattan to Sarasota has, at least in part, influenced the recent rush of sales. For the first three months of 2012, the Corcoran Group counted 5,349 new listings, nearly 16 percent fewer than the 6,406 new listings over the same period last year.
In Southwest Florida, pending sales are up 30 percent over last March, in part because buyers sense that listings of quality properties are diminishing.
Meryl Blackman, an agent at Halstead Property representing the Cobble Hill town house, which received 14 offers, said the limited number of single-family town houses available in brownstone Brooklyn had definitely helped prompt multiple bids.
Along with limited supply, pent-up demand might be driving the new activity.
When the financial crisis hit, buyers held back, waiting for the market to hit bottom.
“But now people are realizing that while the economy may not be as strong they want it to be, the big fear of it collapsing has gone by the wayside,” said Frans Preidel, a vice president of Brown Harris Stevens in New York.
In Southwest Florida, real estate maven Michael Saunders said last week she believes buyer confidence is waxing, and that dynamic, more than anything else, is pushing sales.
Mortgage brokers here and in New York, too, have seen an increase in buyers entering the market, even though many buyers in Sarasota and Manatee counties are continuing to forego debt in favor of cash payments.
More realistic pricing by sellers, too, has generated increased sales, especially among homes priced at $1 million and above. A West Village apartment in New York, for instance, generated tremendous buyer interest when the sellers listed it at just under $1 million, real estate agents noted.
In some Manhattan locales, the level of interest has even translated into a desire for newly constructed units for the first time in roughly five years.
Ken Horn, president of Alchemy Properties, said open-house traffic had picked up at his finished projects, Griffin Court in Hell’s Kitchen and Isis Condominium on the Upper East Side.
Meanwhile, a pair of projects under construction, one on West 15th Street and one in Cobble Hill, also have waiting lists with about 100 names of prospective buyers.
“If you roll the clock back one and half years,” Horn said, “you would have no one on a waiting list. No one would even call until the building was up and done.”
Lenders also seem to be sensing the changing attitudes among.
Skyline Developers, which has owned a site on the southeast corner of Third Avenue and 79th in Manhattan for several years, announced last month that it had closed on a $112 million construction loan with Wells Fargo and was beginning to build a 19-story tower with 45 condos.
While that phenomenon has yet to re-enter Southwest Florida, market analysts say it will be only a matter of time before buyer desire and a lack of inventory collide, creating a need for vertical construction of new residences.
Already, builders like Taylor Morrison and Neal Communities are positioning themselves with new single-family home product, and builders like DR Horton are buying lots in order to construct when market conditions appear right to move forward.
But not everyone shares the belief that the market has rebounded fully or has the enthusiasm to sustain itself throughout 2012.
Jonathan J. Miller, president of the appraisal firm Miller Samuel, in New York, warns that buyer exuberance could be short-lived. He also contends that as the markets improve, banks will begin releasing real-estate owned properties to market, which will alter the sales landscape.
“Once we hit summer, we’re going to see a lot more distressed properties hitting the market,” Miller said.
Original Article // heraldtribune.com
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