NYC Real Estate Bubble Bursts As Apartment Sales Crash 20%

Tyler Durden's picture

New York City apartment owners should take note of the latest 3Q16 "Elliman Report" on Manhattan real estate sales because the market looks to be in free fall.  In fact, the number of apartment closings plunged 18.6% YoY while apartments sat on the market an average of 8.2% longer.  Inventory also spiked with re-sale inventory up 8.2% YoY and new development inventory up a massive 27.2%.   

"The number of re-sales has fallen year over year in each of the last four quarters at an increasing rate.  Listing inventory reflected significant differences in the rate of growth between re-sale and new development.  Re-sale inventory expanded 8.2% to 5,290 while new development inventory surged 27.2% to 973 respectively from the same period a year ago."

Median sales prices did increase YoY by 7.6% but collapsed QoQ despite a massive surge in pricing on the luxury end of the market.

NYC Real Estate

 

The re-sale market looks even more bleak, on a standalone basis, as the overall numbers above are skewed by sales of super-luxury new development units.  The number of re-sale closings collapsed over 20% YoY while days on the market increased 7.5%

NYC Real Estate

 

All segments of the market exhibited volume weakness with co-op sales down 17.1% YoY on a 14.1% increase in listing days and a modest 1.4% increase in median sales price.

NYC Real Estate

 

Condo sales declined 20.1% YoY on a 2.4% increase in listing days and a 6.7% increase in median sales price.  Meanwhile, condo inventory rose over 15%.

NYC Real Estate

 

And, of course, the luxury market seemed to hold up the best in 3Q with volumes still weak at -18.6% but median pricing up 23.9% and listing inventory down YoY.

NYC Real Estate

 

In conclusion, the lesson seems to be that the marginal New York City buyer has been priced out of the market (volume down 20%) while sellers have not yet accepted that the bubble has burst deciding instead to maintain listing prices while letting their apartments sit on the market longer amid growing inventory levels.  Meanwhile, the luxury market is the only segment that seems to be holding up which only serves to prove that Chinese billionaires still have cash they would like to hide in the U.S.

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Soul Glow's picture

So everyone knows the first asset rich people will sell is their paper gold.  I bet the millionaires in NYC that can't sell their third homes in the Hamptons and their second home in the city decided to call their fund managers today and say, "Hey Bill, we need cash.  Sell that stupid gold and silver investment we have."  And their advisor, because the advisor is told by his firm not to buy gold anyway says, "Good idea, you don't need gold anyway."

Of course they never had any gold, just a paper claim to it.  The claim means nothing of course as the gold has been rehypothicated over and over and over.  

Next these rich parasites will sell some stocks, then some bonds to pay their 3 mortgages.  To pay for their cars.  To pay their lavish debts.  

CJgipper's picture

Connecticut already has the sales crash.  Remember that story on the mansion prices dropping 30% when sold?

MillionDollarBonus_'s picture

You have to look at the big picture here. Over the long term, real estate is a guaranteed investment. Think about it - everyone needs a home, and the population is increasing, so no matter what happens, someone will always want to buy your home for at least the price you paid for it. That's accredited economics 101, that we teach to all young people trying to make it in life. I'm shocked that ZHers don't know this!

The Heart Warming Side of Bill and Hillary

Duane Norman's picture

You're a moron.  Policies like theirs aren't economics 101, they're socialism.

http://fmshooter.com/nyc-rent-stabilization-rent-too-high/

pitchforksntorches's picture

Fah. MDB is a genius.  Its like sitting at the feet of Jonathan Swift as he was scribbling "A Modest Proposal".  

codecode's picture

"The Heart Warming Side of Bill and Hillary"... a curious title. I just can't bring myself to read it.

Jeffersonian Liberal's picture

I've read Swift, and MDB is no Swift.

In fact, it was his persistently weak writing that made me question his "satire."

You see, good writers of satire have to walk that very thin line between sounding somewhat serious and ensuring that their readers know they are being satirical.

MDB cannot walk that line.

So I kept asking him and asking him.

He finally admitted that his posts are not satire, that they express what he truly believes.

Given that his writing is too weak to be assumed to satire and given his admission, we have to acknowledge that his posts are not satire, just completely leftist/progressive pablum. He often links to his or her web pages, which are filled with this poorly thought out, bumper-sticker socialism. Take a look some time and you'll see that he is not being satirical here.

The best we can do for the health of ZH is ignore him and hope he spends all of his time at the D.U.  so we can discuss the important issues of our day with intelligence and reason and a humor that is clearly understood to be humor.

boattrash's picture

When the commercial real estate bubble pops, it will make the housing collapse look like a minor speed bump.

When the student loan/education bubble pops, it will make both of the above look like a grain of sand in the road.

When real estate crashes you still are left with real property that adjusts/corrects in pricing and value. When the student loan/education crashes you'll be left with nothing but debt, worthless degrees (in many cases) with a lack of jobs, and a Yuuuuge number of un(der)funded pensions promises.

s2man's picture

You Newbies are so funny.   Actually arguing with MDB.   LOLOL

Bush Baby's picture

I'd say "Crashing" is a little extreme, 2009 was "Crashing" .

I'd go with "Correcting"

Son of Loki's picture

Commercial has already popped in some areas like houston where millions of square feet sit empty mostly due to obama's energy crush but also this recession in general.

Residential is following with hundreds of "For Sale' signs all over as well as 'REDUCED" signs. Very little is moving.

The Houson budget deficit is soaring and deadlock among all parties involved cements the problem since public workers don't want to take a cut in their [generous] pensions yet the city has no more money. The usual problems adding to the crumbling infrastructure [not repaired by the former mayor and this one seems little concerned] and rising crime with a handful of homicides every night by friend tells me.

 

Forward, Comrades!

boattrash's picture

Commercial and residential are both on the edge of some pain, but the student loan/education bubble-burst will be EPIC.

Keep in mind, we still use a 130+ year old education model in the US.

sandhillexit's picture

Houston goes down slowly at first and then very fast.  That city is in for several years of pain.  It is great when everyone is working, but not a good place when no one is working.  

Cognitive Consonance's picture

I'm no economic genius but student loan securities have to be the stupidest goddamn thing in history. Which goes to show how desperate the market is for yield I guess. At least with mortgages a person has some incentive to pay it. Like out of work millenials are going to give two shits about defaulting on their useless loans.

Offthebeach's picture

Idiot.

House size has doubled, while mean occupancy has halfed. I.E., lots of old people rattling around in empty houses.

Localities are raping with real estate taxes, adding fees for services that at half taxes used to be included.

Increase of population is low IQ, low education, low skilled minorities in low quality Demorat rent seeking pubic edjamakintion mills.

I live in well off area and do to ZIRP the elderly hide in their homes and can't afford repairs. Young can't do to progressive land use, and building code idiocracy can't afford homes. Better they should pay towards the Democrat educators from the diploma mills anyways.

Stanelli's picture

The population of Calais, France, has certainly increased.

Somehow I doubt that prices of real estate in Calais has gone anywhere but deeeep down.

MASTER OF UNIVERSE's picture

It is no wonder that MillionDollarBonus_ has an avatar symbolizing USD, and the USA flag, given that all his ideas would place him on the unemployment line if he could get a job. Economics 101 starts with supply & demand, and when supply outstrips demand price invariably falls. Unfortunately, when price cannot meet demands of those indentured into servitude, demand tends to increase along with supply. Clearly, MDB fails to understand that someone might want to buy your home but cannot afford it, or the loan payments that Loans Officers want to charge them. Not only can new entrants not afford the monthly payments on a mortgage but they cannot even scrape up the down payment. Lastly, MBD neglects to account for affordability, and employment/unemployment figures.

 

Note: It must be nice living in an MDB world with the Easter Bunny & Peter Pan to help pass the days of limbo in unemployment land.

brushhog's picture

The population is growing fast in Liberia, I guess they are on the cusp of a housing boom?

CJgipper's picture

I watch a few areas in Florida with no discernable industry.  Sales have completely stopped there as well.

 

"no discernable industry" is to say - you have to have money to live there.  Most houses run 500k-1.5M in these areas, so it's basically small business retirees and corporate workers who saved up.

rmopf2010's picture

The Bubble is on fire

Burst MTF Burst MTF Burst MTF Burst MTF

 

A82EBA's picture

REITs 21 month MA turning down like 2007 leading indic

HenryKissingerChurchill's picture

how many MILLION cameras are there?

who would want to live in such a dystopian city?

Infield_Fly's picture
Infield_Fly (not verified) Oct 4, 2016 11:26 AM

Looks like the slants have stopped buying up everything that moves.

ParkAveFlasher's picture

Precisely.

Dollar is strong vs. European currencies also.  No offset for the falloff of Asian demand.

Kirk2NCC1701's picture

If Trump does not get elected, he'll be dejected when his condos don't get sold or erected.

He needs to make his condo sales Great Again.

Should've built a bigger 'Foundation'.

 

(Anybody get the pun?)

Seasmoke's picture

Don't quit your 3 part time jobs.

I am Jobe's picture

Keeping up with Appearences . High Priced Home and eat top ramen. 

gaoptimize's picture

Worse in San Diego housing market.

Sh0t's picture

San Diego is booming right now 
http://www.sandiegouniontribune.com/business/real-estate/sd-fi-home-schi...

Way outpacing incomes, but who needs income these days ?

I am Jobe's picture

Waiting for Austin, Dallas Texas to crash. Ridiculous priced for cheap laobor and low wages. 

south40_dreams's picture

Not exactly luxury markets compared to manhattan real estate

CJgipper's picture

Price to income ratio.  It's the same.  And that's the problem.

zippy_uk's picture

Don't worry - they'ill just slash interest rates and make more borrowing available ... oh wait...

s2man's picture

Those numbers show me that fewer people are selling,  not so much a lack of buyers.

brushhog's picture

Inventories went up. If fewer people are selling with the same amount of buyers then prices would be increasing. Supply and demand, econ 101.

shovelhead's picture

If real estate is overpriced by 100% and it falls 20% is that considered a "crash"?

I guess crashiness is relative.

brushhog's picture

If you bought right before the decline, then its a crash.

misalkin's picture

US real estates are falling down.

DRV.US

 

DIREXION DAILY REAL ESTATE BEAR 3X SHARES

 

13.2900 +3.50%
chosen's picture

We need to get the chinks out of our real estate markets.

Trekkie's picture

We need to get racist pigs like you out of this world. How about hell?

Spungo's picture

wtf is up with the sale prices? Right above where Tyle circled the 13% drop in sales is a 17% price increase yoy. That's absurd.

edit Nevermind. I see that it's the average. It only takes 1 or 2 really crazy items to throw off the average. The median is a more reliable measure of prices.

dealmakerman's picture

Besides gold, bitcoin, silver, etc. here is another way to protect yourself from the War on Cash and negative interest rates based on a variation of Gresham's law:

https://bunky1787.wordpress.com/2016/09/04/can-you-profit-by-saving-an-extreme-money-overture/

Kasperfx's picture

the high ends comprised of   hedge funds and developers/strawmen flipping to each other making it look like theirs a healthy market and then you have the suckers  and greater, then greatest fools buying into the hype.  seen so many of the same units to come on and off the markets and back on this market is a fools game.

brushhog's picture

Its all coming down like a house of cards