Hi All, Happy New Year! Below is the text of the first front_porch newsletter is a quick attempt to give you a little analysis of the New York City market reports that are coming out today.
* We’ve hit the stall, which can been seen because days on market lengthened significantly. According to the Miller Samuel Elliman report, average 3Q days on market were 134, 4Q days on market 159: There’s the September collapse of Lehman Brothers.
* Prices didn’t really rise as much as some reports say. The Halstead/BHS report shows a rise (you read that right) in median prices of 8%, but that’s really a change in mix as some more expensive apartments closed while starter buyers either waited on the sidelines or negotiated discounts. From the field, I can tell that you prices of $2 million apartments are near flattish, while prices of $500,000 apartments are probably down around 7%. If you don’t want to believe me, one of the best indicators ran in the New York Times on Sunday, which showed declines in the Chelsea Stratus of around 7% from 2007 to 2008.
* We are probably not all going to be living in boxes in 1Q 2009. We know that there are new condo buildings where buyers are not closing – I can think of two in the Financial District that are in trouble, and Brooklyn’s showplace One Hanson Place is renting units — but the numbers show the even post-Lehman, co-ops are continuing to resell, and many existing new condo contracts are continuing to close. In fact, average price per square foot dropped by less than one percent, from$1,193 in Q3 to $1,183 in Q4.
However, “listing discount” — which is one of my favorite stats, expanded from 2.6% in Q3 to 7.3% in Q4. I think this is a sign of weakness in the quarter to come.
Most likely are continued single-digit price declines until market psychology changes — which means the Obama stimulus measures actually cause lenders to make mortgage money available again.
I’m moderating a panel called “Finding the Turnaround” with Jonathan Miller and four other economic gurus on Friday — part of the Inman Connect Conference. I encourage the press to attend, but I’ll also send out a note telling you what they said after.