B
righter Times Ahead for Buyers?
Photo-Illustration: Curbed; Photo: Getty
Is the New York real estate market finally shifting in favor of buyers? According to Kirsten Jordan, an associate real estate broker at Douglas Elliman, buyers are becoming more assertive in their negotiations. She recently had a buyer threaten to walk away if the seller didn't knock $47,000 off the contract price due to a high construction estimate. The seller eventually agreed to a $20,000 discount. "Buyers feel empowered because they want to feel like they're getting a good deal in a market with so much uncertainty," Jordan explains.
The New York real estate market has been difficult to categorize as a buyer's or seller's market for several years. Prices have remained high due to low inventory, despite many buyers hesitating to make offers. The top end of the market, particularly all-cash sales over $4 million, has seen brisk activity at properties like the Aman, Giorgio Armani tower, and One High Line. However, units needing work or in co-ops have struggled to sell due to their long-term ownership.
By spring 2023, listing inventory increased, prices slightly decreased, and buyers started to feel more confident. Ryan Kaplan, an associate broker at Corcoran, recently negotiated more than half the price off an Upper West Side co-op estate sale priced at $2.5 million. Another deal he represented saw a penthouse in a West Village Bing & Bing building sell for significantly less than a nearby penthouse currently in contract at $5,750 per square foot. "I believe it's been a buyer's market for a long time," Kaplan says. "Sellers have either accepted reality or they can't afford to wait anymore." This is especially true for estates but also for many apartments without issues beyond their price.
Buyers are becoming more cautious in their approach to real estate purchases. Foot-dragging and multiple viewings before making an offer are common practices. Svetlana Choi, an associate broker at Coldwell Banker Warburg, notes that buyers often come back multiple times before making an offer or deciding not to make one at all. This can sometimes work against a sale rather than in favor of it.
The cause of this shift is unclear, but high mortgage rates have led to high monthly costs for buyers transitioning from rentals. An older couple shown an apartment by Svetlana Choi were hesitant to pay more than $10,000 a month in mortgage and maintenance fees, even though they could afford more. A $1.3 million apartment, for example, would cost about $10,000 a month with a 20% down payment.
Frederick Warburg Peters, president emeritus of Coldwell Banker Warburg, believes we are still in a market limbo where both sides are being unreasonable. It's up to brokers to inject reality into negotiations. The advantage used to swing back and forth between buyers and sellers, but since the COVID shutdown, nothing has been the same. Even seasonal cycles are no longer reliable. August, traditionally a dead month for luxury sales, has seen a boom in the $4 million-and-up market, according to Donna Olshan's luxury market report. A $43.5 million penthouse at Central Park Tower and a $36 million townhouse on East 79th both went into contract last week.
So, what should a seller do? Don't overprice your property to leave room for negotiations, and price it where you think it will sell. Steven Gottlieb, an agent at Coldwell Banker Warburg, shares a story where he took over a listing priced at over $2 million. Despite no one making an offer under the ask, dropping the price to $2 million resulted in four offers at the end of spring. "The reason buyers are being so demanding is because they can be," Gottlieb says. "If you price at value, you're more likely to have choices. And that takes away the bad behavior."
