The real estate market booms and busts. This is about the only guarantee the market provides. But what do these ups and downs do to New York City buyers’ and sellers’ psychology? Does a person's psychological health bounce back after a dip? Do buying and selling attitudes directly map with the ups and downs of the real estate roller coaster, or do they lag because of real estate PTSD?
Quite a lot has happened in the past 10 years, to say the least. CityRealty checked in with local brokers to find out if and how their clients’ thoughts about buying and selling have changed since the recession. In summary, we found there is less certainty, more anxiety in some aspects and less in others, many more neighborhoods to choose from and many smarter buyers in the market.
Quite a lot has happened in the past 10 years, to say the least. CityRealty checked in with local brokers to find out if and how their clients’ thoughts about buying and selling have changed since the recession. In summary, we found there is less certainty, more anxiety in some aspects and less in others, many more neighborhoods to choose from and many smarter buyers in the market.
Less certainty about the market
Jessica Cohen of Douglas Elliman begins by saying, “In my opinion, real estate in New York City is always finite. There will always a demand to be in New York.” But, she adds, “People are looking more at the long-term choices when it comes to purchasing properties. People have a sense of confidence that in the long haul, real estate is a safe investment. But in the short term, there is a lot of uncertainty. Buyers want more flexibility, like having the option to rent their property, and more security in their investment. Sellers are concerned too. They don’t want to feel forced. They don’t want to sell with their pants down when the music stops.”
Frederick Peters, CEO of Warburg Realty, thinks the biggest change in the past decade centers around buyers feeling less sure about real estate as an investment. “During most of the first decade of the new millennium, buyers felt excited and bullish economically, which led them to bid aggressively for the properties they wanted. Foreign buyers, especially Russians, were also setting price records in New York during those years. Post-recession, everything changed. The Russians disappeared. The Chinese and Koreans, a far more cautious and less lavish group of spenders, became the primary foreign buyers for higher-end real estate. And even as the economy has markedly improved in recent years, bullishness about real estate has not. 2017 was one of those rare years when stocks went up and real estate values in Manhattan went down. Between oversupply in the marketplace and acute price sensitivity in the buyer population, 2018 barely resembles 2008 at all.”
“Between oversupply in the marketplace and acute price sensitivity in the buyer population, 2018 barely resembles 2008 at all.”
Aggregate Sales & PPSF in 2007-2018
More supply equals less buyer anxiety
Gannon Forrester of Warburg Realty thinks there is a lot more supply and buyers feel empowered. Forrester says, “With all of the new development projects in the luxury market, my buyers feel like they have more choices and now take a little more time to make a decision. If someone is looking for a primary residence, it’s a little more normal of a search and there is still that 'sense of urgency' because they truly need a place to live. However, many of my more wealthy clients are using NYC properties as a pied-a-terre. This apartment can be their second or third or even fourth home, so they don't need to act quickly; they can take their time and find what they want. Of course, it’s still about the product. When a building that is really unique and special pops up, either because of the block it is on, the architect involved with the project, or the kind of amenities/services it offers, my clients will still look to jump on that right away. They want something different; it’s not just about the newest and latest building anymore, the property has to offer something special.”
Liza Nematnejad of Douglas Elliman says buyers are more confident they can get what they want. “With the way the market is now, there is more inventory and buyers have their wish list of things they want. It is a nice opportunity for them to get all of those things on the wish list. There are so many new amazing amenities in the new condominiums, there is a lot more to offer. So, someone who wants an outdoor wood-burning fireplace or prewar details or brand-new all-glass condo, they can get what they want.”
Many more appealing neighborhoods
Development is everywhere in New York City. Forrester says, “Clients are more willing to look in different areas than what they are used to as well to find the building they would rather be in. I have some clients that thought they would only live on the Upper East Side because that is what they were used to. They wanted to be right near Central Park and Fifth Avenue but they weren't really finding what they wanted. Because they felt like they had the time and not as much pressure to bid on something immediately, we looked at a few new developments in Chelsea, Gramercy, Murray Hill, and Nomad, and they fell in love with the buildings and took the opportunity to learn and explore the area. They ended up buying in Midtown instead and they have been very happy.”
Nematnejad says, “Traditionally, customers were very set on the locations they wanted and still a number of people have that mentality, but I feel like New York City has become a lot larger as far as location. Someone who only wanted Downtown is now in Midtown. And those who were only open to the Upper East Side will live in Battery Park. The neighborhoods have changed, there are so many new buildings, parks, and amenities. So many locations are becoming nicer lifestyle amenities than ever before.”
“The neighborhoods have changed, there are so many new buildings, parks, and amenities. So many locations are becoming nicer lifestyle amenities than ever before.”
Cohen agrees that many more markets have opened up but says she still finds the strongest markets are where families want to be. “I see a lot of demand for two- to three-bedroom markets with good area school options. Buyers are not sure what the next two years will bring but they are more confident in the five- to ten-year horizon. So buyers are situating themselves and their families on the Upper West Side and the Upper East Side, in school zones where they don’t have to be cramped."
Best Performing Neighborhoods Since the Recession
Click each region for price per square foot in 2007-2008 and 2017-2018.
Prices by Region in 2007-2008 vs. 2017-2018
NYC buyers are smart buyers
Jason Haber of Warburg Realty recommends, “The lesson from the recession is to buy smart. Impulse buying, overextending to get the home of your dreams, and buying without doing your homework have all gone the way of the fax machine. Today’s buyer comes armed with data, comps, neighborhood analysis, and newspaper articles. In some cases they know more about pricing than the listing agent.”
Nematnejad comments, “In general, buyers are savvy and educated. Investors come in and take advantage of good inventory and good prices. It is rare for there to be a good buying opportunity in New York City and this is key.”
Cohen adds, “Entry level price points, for each category, are the desirable spots to be. Those are busy because buyers want to get best-perceived value on what they’re buying. Some of the most luxurious properties are the hardest sell because buyers want the most discount and sometimes sellers of those properties don’t want to reduce their profit. I think developers of new properties are more negotiable than a buyer who bought three years ago.”
Buyers want more for less
The luxury market has changed and many buyers have been able to get apartments for less than even a year ago.
Nematnejad says bigger is better in buyers’ minds. “A lot of people want larger apartments as a trend. In New York City, space is a premium and people always more. I am seeing people asking for larger apartments with larger living rooms for entertaining. They want larger baths or windowed baths that feel like a spa. If buyers purchase in older, prewar buildings, they are knocking out rooms to create a master suite with a dressing area or home office area and walk-in closets.”
Claire Groome of Warburg says, “The attitude of the buyer is no way to overpaying and the numbers must make sense. A bargain is even better! The market is tricky but things that are priced right are selling. Listen to your broker...no one says you need to have a “fire-sale” market but comparables matter very much. Buyers look and care about them. The sellers that don’t want to listen to their brokers or the press are sitting. As you can see we are at a record high of inventory since 2013 I think I read not too long ago. The investment aspect has always been an important factor in the higher end of the market, especially if they are renovating. Resell must make sense to the savvy buyer. I tried to explain this to a client the other day. The market is speaking and he’s not listening.”
Cohen concludes, “We are in a transition time. Some people are picking up some great deals and there are people out there looking for great deals. The people that are holding on regardless of what happens in the short term are feeling pretty confident they will be fine. There is no other New York City in the world.”
See the Full Neighborhood Breakdown:
| Neighborhood | 2007-2008 Avg PPSF | 2007-2008 Number of Sales | 2017-2018 Avg PPSF | 2017-2018 Number of Sales | PPSF Change |
|---|---|---|---|---|---|
| NoLiTa/Little Italy | $1,028 | 92 | $1,991 | 53 | 93.64% |
| Flatiron/Union Square | $1,291 | 623 | $2,447 | 300 | 89.48% |
| Greenwich Village | $1,360 | 357 | $2,486 | 176 | 82.75% |
| Tribeca | $1,282 | 754 | $2,286 | 663 | 78.26% |
| Lower East Side | $1,021 | 134 | $1,812 | 194 | 77.52% |
| Roosevelt Island | $750 | 77 | $1,268 | 9 | 69.2% |
| Hamilton Heights | $518 | 134 | $866 | 77 | 67.07% |
| Harlem | $647 | 860 | $1,062 | 407 | 64.3% |
| Midtown East | $1,393 | 506 | $2,264 | 343 | 62.55% |
| Chelsea | $1,200 | 914 | $1,927 | 561 | 60.64% |
| West Village | $1,625 | 164 | $2,603 | 225 | 60.12% |
| Broadway Corridor | $1,111 | 590 | $1,756 | 389 | 58.07% |
| Financial District | $1,017 | 1369 | $1,561 | 618 | 53.47% |
| Yorkville | $1,045 | 594 | $1,570 | 556 | 50.28% |
| East Village | $1,219 | 295 | $1,786 | 228 | 46.57% |
| Gramercy Park | $1,258 | 317 | $1,782 | 240 | 41.59% |
| Neighborhood | 2007-2008 Avg PPSF | 2007-2008 Number of Sales | 2017-2018 Avg PPSF | 2017-2018 Number of Sales | PPSF Change |
|---|---|---|---|---|---|
| SoHo | $1,549 | 263 | $2,192 | 213 | 41.49% |
| Lincoln Center | $1,320 | 680 | $1,866 | 388 | 41.36% |
| Washington Heights | $510 | 40 | $715 | 69 | 40.14% |
| East Harlem | $742 | 189 | $1,034 | 162 | 39.34% |
| Turtle Bay/United Nations | $1,100 | 394 | $1,502 | 233 | 36.62% |
| Riverside Dr./West End Ave. | $1,158 | 840 | $1,581 | 321 | 36.51% |
| Battery Park City | $1,017 | 348 | $1,377 | 298 | 35.38% |
| Carnegie Hill | $1,366 | 302 | $1,848 | 186 | 35.29% |
| NoHo | $1,851 | 65 | $2,359 | 36 | 27.43% |
| Murray Hill | $1,097 | 1048 | $1,388 | 531 | 26.53% |
| Inwood | $462 | 14 | $565 | 12 | 22.38% |
| Lenox Hill | $1,331 | 672 | $1,603 | 513 | 20.41% |
| Midtown West | $1,470 | 2110 | $1,751 | 986 | 19.15% |
| Morningside Heights | $971 | 29 | $1,139 | 16 | 17.31% |
| Beekman/Sutton Place | $1,137 | 69 | $1,329 | 54 | 16.91% |
| Park/Fifth Ave. to 79th St. | $2,161 | 106 | $2,441 | 90 | 12.97% |
| Central Park West | $2,006 | 657 | $1,980 | 309 | -1.3% |
Contributing Writer
Michelle Sinclair Colman
Michelle writes children's books and also writes articles about architecture, design and real estate. Those two passions came together in Michelle's first children's book, "Urban Babies Wear Black." Michelle has a Master's degree in Sociology from the University of Minnesota and a Master's degree in the Cities Program from the London School of Economics.
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