It’s crystal ball time again, in which we use the past, the present and market reports to look into the future of real estate market.
Let’s start with the good news. New York is becoming “‘a place to be’ for the oligarchs of the world,” according to Stribling’s Luxury Residential Report. Stribling reflects that while sales like Dmitry Rybolovlev’s $88 million penthouse purchase at 15 CPW are an anomaly, such sales do “signal the return of the ‘money means nothing if this is what I want’ attitude,” that was “so prevalent during the economic bubble.”
In Stribling’s category (properties going for $5 million and up) luxury sales really made their dramatic recovery in 2010, the brokerage says, but co-op dollar volume was up 23.2 percent in 2011. Less encouraging, condo dollar volume dropped 15.6 percent and townhouse dollar volume basically stayed the same.
But Stribling concludes on a bright note: “While it is rather boring to report on such a relatively stable market, it is also quite a relief after the turmoil between 2008 and 2009.”
But then there are the sobering numbers from the Jan. 2012 report of S&P/Case-Shiller to contend with. Their home sales price indices showed an annual decline of 2.9 percent in New York (and a 3.9 percent and 3.8 percent drop in home prices for the 10- and 20-City Composites they studied).
Fortunately there’s hope for the future, according to the new Urban Land Institute survey. The ULI determined that data from across the U.S. shows “reason for optimism throughout much of the real estate industry.” Based on economic indicators like rising gross domestic product, job creation and falling unemployment, they projects “broad improvements for the nation’s economy, real estate capital markets, real estate fundamentals and the housing industry through 2014.” We like the sound of that!
Commercial real estate activity will be the real star of the sector, the ULI predicts, with total transaction volume rising from $250 billion in 2012 to $312 billion in 2014. The housing industry is even expected to begin a slow turnaround, although apartments may be cooling off a little, with the national vacancy rate expected to jump from 5 to 5.1 percent. (Imagine if New York had a 5 percent vacancy rate?)
Celebrations should be muted though, given that the times we’re currently living in are not the best. According to the latest report from the Furman Center for Real Estate & Urban Policy at NYU, there were fewer foreclosures across all of New York than a year ago (good), although Manhattan had more foreclosures than it did a year ago (bad), but still far fewer foreclosures than any of the other borough (good).
Less promising were sales—volume was at its lowest citywide level since the 2nd quarter of 2009—and building permits, down 60 percent from the last quarter (but it was December, after all). Housing prices across all boroughs remained basically flat, except for Staten Island, where they were up. The next Brooklyn? We doubt it.
And so, there you have it. The uncertainty and ambivalence continues.