Inside: a record amount of price drops in NYC
This week from the Bloomberg report:
In the week through September 9, there were 774 homes in Manhattan, Brooklyn and Queens that got a price cut, the most for any seven-day period in data going back to 2006, according to a report Friday by listings website StreetEasy. The previous weekly record was in March 2009, during the global recession, when 713 properties were reduced. -Bloomberg 9/21/18 Oshrat Carmiel
Is this the sign of a crash?
Welcome to the new norm. Where 53% of all current properties that have been on the market for more than 30 days have seen at least one price drop. Where many buyers wait for that first price drop on a property before they even go see it. We hear things like “That apartment looks great online. I wonder what they will drop the price to?” Buyers and brokers call us to schedule appointments to see properties and even before vetting the benefits of the property, they inquire about the seller’s
negotiability. Now when we meet with sellers to discuss marketing and pricing, we often give two prices . One for what the home is worth and the other knowing that in 30 days we might need to make our first price drop. Two incredibly different strategies.
Do these price cuts signal a greater market crash? If we take a look at the article:
The previous weekly record was in March 2009.
Was that previous record right before the big crash? No it wasn’t, it was 6 months after. That last grand price drop extravaganza lead to the second largest New York City real estate value eventual rise in the past 76 years and it lasted for about 65 months.
This makes sense. People don’t reduce prices because they feel the market is going to drop. Owners drop prices because the market has already crashed. For the past 120 days we have seen about 40% less signed contracts than the prior year and about 55% less deals done than during the same months in 2015.
The market already crashed. Now sellers see it and are slashing prices to bring back sales. When an apartment is priced well and I mean really well, it sells and it sells fast. Just this past week we saw properties receiving offers above their asks and several with multiple bids in various price sectors. We are no longer in a crashing market, we are at the bottom and the bottom is always followed by a recovery. We’re not sure when the rebound will happen but that will be the next phase.