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Monday, May 19, 2008

Is it a good time to buy in Tribeca?

tribeca manhattan buyersAs some of you know, I've been a Tribeca local since 1995. Another long-time resident and friend, who's kids go to PS 234 with mine, sold his loft last year, and has been leasing a place in the neighborhood instead. He's one of several people I know who sold and moved into a rental, in part because they believed the sales market had "peaked". These are folks who had built substantial equity over time in their properties. He sent me an email asking about the market. Here's my response, and a more detailed analysis on the downtown landscape for buyers.

Q: How's biz? Is it time for me to start looking yet?

A: It depends on what you want, where you want to be, and why you want to. Its a more balanced market. There is much more inventory overall, but nobody's giving anything away. I personally think we'll be a little flat this year; the number of transactions is down. People are just waiting on the sidelines to see what happens. Real estate markets don't act like commodities. When demand drops, a certain amount of inventory also goes off line as people discover they can't achieve the unrealistic number they had in mind. The dynamics of supply and demand cause less activity until confidence changes— but not necessarily lower prices. If the economy fundamentally changes into a recession, the story might be different; its about confidence right now. That's more emotional than empirical, and it can change on a dime. I personally think it will be a good summer for buyers. Business is actually pretty decent for me. Download the latest Corcoran report here — Peter

selling downtown today

Bear in mind that not everyone's numbers are unrealistic. Tribeca lofts and apartments which are priced correctly, based on recent sales data, still sell well. I always advise my sellers to weigh the most recent transfers in their buildings and the immediate area, more so than the current asking prices of homes on the market; which reflects the actual behavior of people in a real transaction, rather than the hopes of a seller. It seems basic, but it is a conversation I have on almost every interview by a potential seller for my marketing services. Proper pricing and wide marketing are the factors that get the most out of the marketplace. Make sure that you understand what your broker is going to do for you before you hire one. Agents' capabilities can vary greatly, even within the same brokerage organizations.

buying downtown today

So should you buy today? Buyers in the market today are getting a better selection of properties than they have in years. They are being choosier. Making offers below asking and negotiating deals. It's actually a healthy marketplace where motivation counts for much on both sides of the transaction. However bottom feeding buyers and sellers, just trying the market on for size, are walking away from each other disappointed. I think its a great moment to buy a home, perhaps the best in the past couple of years. Do you need more room? Are you ready to move to Chelsea or the Meatpacking district? Do you think that new development might negotiate or offer an incentive? Now more than ever buyers and sellers need up to the minute guidance.

If you are waiting for the market to plunge, it hasn't happened. The overall downtown loft and apartment market remains strong, but the messages are mixed. Here's a snapshot of the overall downtown market by type and size:

click chart to enlarge
tribeca, chelsea, soho, greenwich village and downtown manhattan real estate sales

Co-ops are up across the board in every price category; these represent the great majority of arm's length transactions between individual homeowners and buyers. New developments and conversions are virtually all condominiums. These show some declines in average and median price (the price most people pay for a unit), depending on its size. Inventory is trending upward in new developments too as the pace of sales slows in 2008. The current uncertainty in the economy is the main cause in my opinion, as buyers and sellers wait on the sidelines to see what happens.

focus on tribeca
In my own neighborhood of Tribeca, the number of transactions dropped 50% between Q1 2007 and Q1 2008. Off about 30% since the previous, last quarter, of 2007. Those Q1 2007 sales figures also contained some large new developments which all closed in a short period of time— skewing the average and median pricing statistics upward. In fact about 50% of the deals in Q1 2007 were at 200 Chambers Street in Tribeca. Backing those closed sales out of the mix, the number of transactions year over year is about the same. Co-op sales actually increased a bit in both volume and median price, and are probably a better indication of resale interest. We'll likely see some more price spikes in Q2 & Q3 2008, as 101 Warren Street completes construction and closes on its inventory of super luxury units. These new buildings are indicative of the interest in Tribeca, as the neighborhood continues its transition into one of New York City's prime locations.

All things considered, the market in Tribeca remains very strong, with a real opportunity for buyers to find what they want, at prices which are momentarily flat. Mixed messages? Sure. But history is on your side if you are looking for a home that you'll be in for a few years. Ready to jump in? How do you feel about your future, and that of New York City in general? Is the glass half full?