FAKE NEWS REAL ESTATE
Why the newspapers will always have it wrong.
New Yorkers are smart; I bet you’re one of them. You probably make a great living in finance or banking. And, because you read the papers, track sales on online, and listen to the experience of others (who bought several years ago …. with a different budget …. in Long Island) you’re also a real estate expert, right?
It’s amazing how many smart and successful professionals truly believe they have a solid handle on the NYC real estate market simply because they read the headlines. Countless times my clients forward me an article because they think they’re educating me. Or, they tell me a story about Uncle Fred who got a great deal in Hicksville, for sale by owner, in 2010. Dude. Long Island is not NYC.
But I get it. You read things; you hear things. And I’m here to tell you that it’s fake news or at the very least, late news. Headlines sell papers, get you to click, and give you a false sense of what’s actually going on in the market. Remember these headlines in 2021 from the NY Times?: New Yorkers Are Fleeing to the Suburbs / Movers in NYC Are So Busy They’re Turning People Away / The Richest Neighborhoods Emptied Out Most as Coronavirus Hits NYC. Headlines like these convinced most people that everyone sold their NYC apartment and left. And the less sophisticated buyer was even more convinced that they could scoop up an apartment for 50% off. Which isn’t my first experience with this fantasy. When the 2nd Ave subway construction was going on in 2007, some buyers thought owners who lived on 2nd Ave would give their apartments away! That couldn’t be further from the truth, then and now. (…and in 2027 when phase 2 of the 2nd Ave subway line commences. I'm on to you.)
The majority of the people that fled NYC during the pandemic were young renters. Since they no longer had to go to their office to work and since there was nothing open during happy hour, they saved $3,500 / month by moving back home with mom & dad in the suburbs. But what about those who owned? Oh, they fled all right - to their Hamptons house! The USPS data proves though, they did’t sell their Manhattan pad. They simply moved to their second home temporarily. Why? Because New Yorkers are smart. They knew NYC would bounce back. And bounce back it did - 9 months later even the real estate industry was taken aback at the sales activity in Manhattan. (2021: one of my best years ever…until 2022)
A year later, the headlines read Record Breaking Sales! Which of course is interpreted by sellers to mean, record breaking prices. Not exactly. A lot of trading is happening because more people are working from home and need a larger space. Renters have to go back to work in their office now and they are finding that it’s cheaper to buy than to rent, given the surge in young people moving back to the city and landlords spiking rents due to demand. Again, more trades. But the prices remain steady. At the time this article was written in the winter of 2022, NYC real estate had recovered from any covid discount pricing. And prices remained stable. These “record breaking sales” were referring to the shear volume of transactions, not soaring prices.
And don’t be fooled by the online closed sales data, that you so diligently track. These figures are an entire season behind the pulse of the market. From the time an offer is accepted to the time an apartment closes, it’s anywhere from 3-4 months. It takes that long because of the board application and approval process, which is unique to NYC co-ops regardless if you buy all cash or finance. (For more detail on timeline, reference Lifecycle of a Real Estate transaction: What Happens Next?)
Because of my red-bottom boots on the ground, I feel the pulse of the market in real time, and I can easily translate dramatic headlines. I feel when there are no offers. I feel when there is a flurry of interest in the market - whether it’s on a particular property or if it’s a particularly busy weekend. I know if the market is really dead or if it’s white hot because I experience first hand the lack of inquires and the bidding wars. There is no paper report available for this real time insight because they don’t know it’s happening. They don’t know its happening until it closes and that’s an entire quarter too late.
So, read the papers. Spend hours online surmising your own market analysis. And then come to me with your questions. Let’s banter and talk for hours like school girls on a telephone with a long curly chord. Let me explain and educate you on your specific market sector so that you can be confident you’re making the best decision moving forward. Because let me say this: in my many years of experience dealing with very smart clients from economists to hedge fund analysts, all of whom are very wealthy, their Manhattan real estate predictions have been inaccurate, downright wrong and sprinkled with cocky. (Arrogant Cocky is a New York Delicacy, like Gray’s Papaya.) Oh, and careful leaning too heavily on your google feed. Remember, it’s partially derived from your pornhub search. Ooops.
Just work with me. Avoid the embarrassment.