The Insider

Recession and Real Estate. Implications for YOU

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In the last few weeks, I’ve heard a lot of people fretting about an impending recession, and using this as a rationale for not purchasing real estate.  Well, here’s a news flash: there is not a strong correlation between recessions and real estate prices, positive or negative. Yeah, you read that right.

Let’s take a look:

This graph shows the (national) S&P Case-Shiller US National Home Price Index from about 1987 to present. The gray areas are recessions. As you can see, home prices were flat, up or down during recessions during the last 45 years. Let’s be clear: I am NOT saying that prices won’t come down in real estate in NYC. What I AM saying is that making your decision predicated on the (seemingly consensus) idea that a recession is impending and that this means prices are coming down is not useful (and not based in actual reality).

How about stocks? Well that’s a different story:

Here’s one conclusion: in the face of an (apparent) impending recession, it is probably better to be in real estate than in stocks.

Here’s another way to think about it. As we’ve written about in the Insider in the past, NYC real estate buyers are on average very different from the rest of the country. When your average home price is, say, $400,000, you save $40k, and get a loan for the rest.  In New York City because of our price points, jumbo loan requirements,  and the financial requirements of coops, a lot more cash is required. So people sell stocks and buy real estate. About half of them buy their properties for cash.  So for NYC property buyers, the purchase decision is more about asset allocation than affordability.

Let’s review asset classes:

Here’s what we know about real estate. Over the long term, it preserves its value. The Furman Center published the most comprehensive longitudinal study of real estate that I’m aware of, spanning 1974 to 2006. Their conclusion is just as relevant today as it was then:

  • Reassuringly, despite past price volatility, the overall health of the City’s real estate market remained strong over the past three decades, with the losses from the downturns representing only a fraction of gains from the upturns. Source: Trends in New York City Housing Price Appreciatio


With all of this in mind, consider allocating more assets to real estate as it’s likely to outperform stocks in a recession.


Have a great Thanksgiving weekend, everyone!


Look Out Below? NYC Still Best In Class

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Watch the overview of today’s Insider with Josh Rubin and Mark Chin

The Insider Index continues to move back towards a more balanced market as you can see above.

This shows why the Index is moving nicely: contracts signed are ticking up while there are fewer price drops than a week ago.  You can see how sensitive this measure is to stock prices and mortgage rates, which have been both moving favorably in the last week.


This week the Insider is focusing on price trends, and how to think about NYC in the context of what’s happening nationally. just published an article entitled ‘No One Wants To Catch a Falling Knife’: What To Expect in the Housing Market for the Rest of 2022”, and reading it, one would come to the conclusion that the sky is falling. Well maybe it is, but don’t expect it to be the same here as it is in other places.


Let’s look at some charts:

This chart plots median prices over time in Sacramento CA, a prototypical hot market in the pandemic.  You will notice that the January 2020 median price was about $420,000 and the peak was achieved in summer of 2022 at just about $625,000, a 49% increase over two and a half years.

Let’s look at Manhattan:

The January 2020 figure was $1.1 million, and the peak was achieved in May of 2022 of $1.26 million, an increase of 14.5%. The obvious conclusion: New York city has far less room to fall.


The paper is rather involved, so let quote the relevant points from Goldman’s own summary:

  1. Policymakers tend to stop hiking when year-over-year inflation is still relatively close to its peak, rather than waiting for it to fall significantly.
  2. Relatively large rate cuts tend to come fairly quickly after the hiking cycle ends.

Why do I think this is significant?  Because the headline of last week was that inflation had come down more than expected.

If sustained, this would imply we are very near the end of the tightening cycle. To quote from the Goldman Sachs report: “On average, hiking cycles ended when year-over-year inflation was within 10% of its peak (e.g. down from 5% to 4.5%).” As you can see we are within that range right now

So where does that leave us in terms of buying/selling strategy? The Insider has been harping on this point for months, but it boils down to: don’t be a sheeple. New York didn’t see the same massive price expansion that much of the country did during the pandemic. So don’t expect it to fall far, either, if the market softens. This means you should have the confidence to buy during this period of weakness knowing that real estate is inherently a long term investment. If you wait until the Fed is dropping rates, you will be in a very competitive market, with bidding wars making it difficult to get the home you want.


Have a great weekend, everyone!


NYC Big Picture

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Click to watch the recap of today’s Insider with Josh Rubin and Mark Chin

Let’s get this out in the open: yesterday (Thursday 10th November) the financial markets posted some remarkable results:

  • Dow up 1,200 points (+3.7%)
  • S&P 500 up 207 points (+5.5%)
  • Nasdaq up 760 points (+7.4%)
  • The yield on the 10 Treasury dropped 31.3 basis points (biggest one day drop since 2009)
  • 30 year jumbo fixed rate mortgages dropped from 6 ⅜ to 6.0%

Stocks are going to rock when the market perceives the Fed’s war on inflation is coming to an end, and yesterday’s action is a harbinger of things to come.

As I pointed out in the Insider last week, because of the frictional costs of buying and selling real estate, it’s appropriate to think about it in the medium to long term. In fact, most of the companies that were in the i-buyer space (that is, companies that offered to buy your home for cash immediately with the plan of sprucing them up and flipping them) are either licking their (rather deep) wounds or are out of the space entirely.

Licking wounds:

  • Opendoor (no choice but to tough it out; it’s their entire business model)


  • Offerpad (no choice but to tough it out; it’s their entire business model)


Source: NY Times


Out of i-buying entirely:

  • Keller Williams
  • Redfin
  • Zillow

Here’s the takeaway: short term trading real estate sorta works when the market is rocketing upwards. When the market is going down while financing costs are going up it is a guaranteed way to lose a shocking amount of capital quickly. So stop thinking about real estate in the short term already.

Let’s consider some of the larger demographic, structural, and financial forces at work.

  • NYC is not building enough apartments. It doesn’t take a genius to figure out that with rents breaking all-time highs this year, there is a scarcity of apartments in the city.
  • Construction finance has gotten a lot more expensive as interest rates have risen.
  • The 421-A tax incentive program expired in June of 2022. Over the last decade this program helped finance 117,000 apartments. Without this tax break, building rental buildings is not economic.
  • This is pushing developers to building condos, which have a slight edge over rentals without the 421-A tax break
  • However, in order to protect margins, developers have to build luxury properties, often building far fewer but larger units than they could as-of-right.

Note: most of the buildings that were torn down were walkups, most of what replaced them were 200+ foot towers with very large apartments.

Note: most of the buildings that were torn down were walkups, most of what replaced them were 200+ foot towers with very large apartments.

Housing is outstripping jobs rather spectacularly

(these data look at pre-Covid trends because post Covid data is super noisy). According to the Citizen’s Budget Commission, a research and advocacy group, “Between 2010 and 2018 New York City’s job base increased 22 percent, while its housing stock increased only 4 percent, resulting in the addition of only 0.19 housing units for every new job created this decade.”

The real estate industry in NYC is breathing a sigh of relief that Kathy Hochul was re-elected, having invested heavily in her campaign. There are two reasons for this: her commitment to the MTA and congestion pricing (which we covered here), and her plans to revive a 421-a tax abatement look alike.

evisited in 2023Earlier in 2022, Hochul proposed a new tax abatement called 485-w, which deepened the affordability requirements and percentage unit requirements to qualify. Opponents lambasted the measure as not doing enough and the proposal was ultimately pulled from the budget. Expect this concept to be revisited in 2023, as developers look for returns on their investment in Hochul’s re-election.

The old adage is “when the tide goes out, all the ships go down” and that is largely true. That being said, in New York City, the ebb tide is limited by a structural lack of supply that cannot be solved in the short term. Look for NYC to continue to outperform other large metro areas for the foreseeable future.

Have a great weekend, everyone!



Bidding Wars Are Back! Yes, You Read That Right.

By | The Insider | No Comments

Click to watch the recap of today’s Insider with Josh Rubin and Mark Chin

In this “good news is bad news, bad news is bad news” kind of market, it is easy to get overwhelmed with doom scrolling. The Fed tightened another 75 basis points this week and the S&P immediately sold off. The GDP numbers are strong? The S&P sells off. The job market is stronger than expected? The S&P sells off.

So why is the City awash in bidding wars right now? Here at the Rubin Team, we carry significant inventory (usually 30-50 listings at any given time) and have a lot of buyers we’re working with. So we see a fairly good slice of the market, at least in Manhattan. And in the last week, the most notable thing we’ve seen is that 80% of Rubin Team agents have been involved with at least one competitive bidding situation in the last 7 days. Roughly 25% of the time when we’ve been representing buyers, we’ve seen best-and-finals. One of our listings just accepted an offer ~22% above the asking price.


Douglas Elliman internal data suggest that city-wide bidding wars account for 7% of current deals, as compared to a long-term average of 5% (Rubin Team data is heavily skewed to Manhattan south of 96th Street).



So what is going on?

  1. The sub 2 million dollar price point is dominated by white collar workers, and clearly these people are feeling confident (unless they work at Twitter). This suggests strength in NYC employment.
  2. Let’s not forget how much cash is always sitting on the sidelines here. By way of perspective, there are nearly 350,000 millionaires that live in New York City, and there are about 12,000-14,000 residential real estate transactions a year in Manhattan.
  3. As we wrote last week in the Insider, contracts signed per week have been decreasing since about March, and are now about 20% below their multi-year averages.
  4. In order for that to be true AND bidding wars to be happening, there can only be one conclusion: sellers have capitulated by dropping prices enough that buyers are finding selective value, even with interest rates up and the S&P 500 down.

Imagine what the market would look like if the S&P were a thousand points higher and interest rates were dropping.

Let’s talk about Inflation for a sec:

The traditional viewpoint is that real estate is a hedge for inflation. The theory is that “inflation” is the increase in price of goods and services. Real estate is the mother of all goods, so it should inflate as well.

Avison Young just published a study of this in the US, Canada, and the UK covering all real estate asset classes. I will spare you the details of all the correlation percentages and the lengthy analysis. Here’s the punchline: only residential real estate provides real (i.e. inflation adjusted) positive returns over every time horizon from 5 to 10 years, though the results in shorter time periods is more murky.




This brings me to close on an ongoing theme of the Insider. I think that because New York is first and foremost the center of finance for the world (post-Brexit), people think about real estate in the same breath as stocks and bond funds and derivatives and such. But real estate is fundamentally not such a liquid asset and is a long term investment.


To highlight this point, imagine if you had a 10% frictional cost in buying and selling Tesla (or any) stock, as you do in real estate. You would surely be inclined to think about it as a long term investment rather than day trading it.


Therefore, the obsession with timing the real estate market is inappropriate and often leads to the wrong decision, when seen in the rearview mirror.

I remember taking clients out who were looking to invest in 2009 and 2010, who were obsessed with getting top condo product for under $1,000/sf. They couldn’t understand why the only thing I was showing them was seriously compromised in some way… like ground floor, or every window looking at a wall, or whatever. They ended up deciding to “wait for the bottom” of the market, and of course ended up missing out on a nearly decade run in prices.

Real estate returns need to be thought of in half-decade increments, not 6 month increments.

Have a great weekend, everyone!


Risk and Reward in Real Estate: NYC Still the Pick of the Litter

By | The Insider | No Comments

Last week in the Insider we discussed the Insider Index, which showed buyer and seller sentiment in the market by looking at a ratio of price drops to contracts signed. 

This week, the Insider is pulling back the lens to look at things from a more macro perspective, as we like to do.


Watch the recap of today’s Insider with

Josh Rubin and Mark Chin:


Last year, Bloomberg published an article entitled This One Metric Shows That New York City Will Be Fine (sadly behind a paywall) makes the point that New York City real estate may not appreciate as much as some other frothier markets (hello Austin and San Francisco amongst others). But New York does not go down as much when the market starts misbehaving. This means New York gives you the best return of any US city when adjusted for risk.

Yes, that was last year’s news. The point, however, is still relevant today. Let’s look at the UBS Global Real Estate Bubble Index, published last week.  In it, the bank ranks various global cities by bubble risk.  You will notice how low on the list New York City is.

Clearly this is good news. The report goes on to point out that New York has experienced a strong nominal price growth of almost 10% (y.o.y, halfway through 2022), but when measured in real terms (adjusted for inflation) we are flat for those twelve months. LA, San Francisco, and Boston all look worse through this lens.

Yes, there are headwinds for NYC, particularly with layoffs on Wall Street and in big tech, not to mention the recession that is about to start (or that we are already in, according to some).  With the S&P down, and interest rates up, the number of contracts signed in Manhattan is down.

That being said, there are some bright spots on the horizon. The overhang of new development product (on the market and shadow inventory) has evaporated. With the 421-A developer tax credit program now expired and construction financing getting very expensive as interest rates rise, it’s hard to see where new housing supply is going to be coming from, which will constrain the supply side of the equation.

Further, it’s been instructive to look at the stock prices of real estate sales companies in the last week.

So why is Anywhere Real Estate (formerly named Realogy) up 7.5%, Redfin up 15.97% and Re/Max up 5.82% in five days? Simple. The market is starting to think we are near the end of the current Federal Reserve tightening cycle. With the prospect of interest rates dropping in 2023, stock prices (which are leading indicators) are suggesting that the market thinks good times are around the corner.  Remember: dropping interest rates means a rising S&P 500. As I’ve written in the Insider before, when the S&P is up, NYC real estate follows.

It follows that if you want to establish a position in real estate, now would be a good time to start. Waiting until the lemming rush means you’ll be back in bidding war territory – and that could be soon.

Have a great weekend, everyone!


The Inaugural Look at the Insider Index

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With prevailing market sentiment somewhat uncertain, we have been considering how to articulate this this in data for our faithful Insider readers.  In today’s edition, we are introducing the Insider Index – a time series ratio of weekly price improvements and contracts signed in Manhattan.


Watch the recap of today’s Insider with

Josh Rubin and Mark Chin:


Why is this useful?

As we all know, markets consist of supply and demand. Price adjustments are a direct correlation to seller sentiment. It is a sharper and more sensitive measure than supply itself. If seller’s expectations are becoming more realistic, rather than remaining obstinate by holding the line on their asking prices,  then it is clear that there is greater concern in the supply side of the market and that aspirational pricing is dissipating.

Contracts signed are our most accurate measure of demand. As we have mentioned in The Insider before, there is no direct measure of how much money is on the sidelines waiting to buy properties in the residential market, and there is no count of how many people are out looking at properties.  The only thing we have is the outcome of that demand, which is signed contracts.

So these two data series are very useful measures. The innovation in the Insider Index is in presenting these data as a ratio, which becomes useful.  

There is no direct place to get a time series on price drops. UrbanDigs doesn’t provide it in their Chart Room, Streeteasy doesn’t provide it in their Data Dashboard, and neither does Resource, the proprietary database used by the top three New York City brokerages, including Douglas Elliman. Even our favorite Manhattan expert, Jonathan Miller, doesn’t produce a chart on this. The good news is that we’ve done the hard work for you!

Let’s take a look and as always, we love hearing from you with your feedback!

These are data going back to Jan 1 2021.You will see a robust number of contracts being signed compared to the price drops in that period, and persisting until around the beginning of 2022, when price drops start rising rather dramatically.

From April 2022 to now, the number of weekly contracts signed drops consistently. Then, suddenly in September 2022 price drops are larger than contracts signed. Hello, buyer’s market!

Here is a more dramatic and clearer presentation of the same data, which is simply the ratio of price drops to contracts signed. This is the first time these data have been presented in this form that I’m aware of anywhere. 

In this format…

  • The cumulative effect of dropping stock market and interest rate hikes becomes clear; and
  • The magnitude of the market sentiment change is readily apparent.

One more chart for you follows, which explains how to interpret the Insider Index by the numbers:

In a seller’s market, there are at least 4 signed contracts for every price drop.

A balanced market is anywhere from 4 signed contracts for every price drop to an even 1:1 ratio.

A buyer’s market is one in which there is at least one price drop for every signed contract. As you can see in the graphs above, currently there are two price drops for every signed contract. Now, that tells you something about this market.

We’ll continue to update our readers on how the Insider Index is behaving periodically.

In the meantime, have a great weekend, everyone!


The Insider: Let’s Talk About Cars

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As I have been writing about in the Insider, if there is a trigger that shakes the financial system it will be unlikely to originate in the housing market, unlike in 2008. In the last week, I have been considering whether the trigger could come from the auto financing sector. Why?

Watch the recap of today’s Insider with Mark Chin:


1. There is a price bubble in used cars – which seems to be collapsing

And it makes sense that the bubble would be collapsing. The cause was a supply chain meltdown, making new cars scarce and driving buyers into the used car market. But…

2. The Supply Chain Is Normalizing

The following graph shows the backlog of ships waiting to drop cargo in the Los Angeles Harbor.

Source: Marine Exchange of Southern California & Vessel Traffic Service Los Angeles/Long Beach

And here is a graph of an index of supply pressures maintained by the New York Federal Reserve:

With the supply chain normalizing, the new car market will spring to life and used cars will lose their luster. To add to that dumpster fire, buyer sentiment is swinging towards electric vehicles so older gasoline combustion engine vehicles are doubly under pressure.

Everyone knows that in 2008, the credit box for mortgages was loose. I’m pretty sure my dog could have gotten a (no-doc) loan but times have changed and mortgages are still relatively hard to get with bad credit. However, the same is not true of the auto loan market, where a large proportion of the 1.5 TRILLION of loans outstanding are sub-prime. And the loan amounts are going up, as you can see below.

You can see serious growth in subprime and “deep subprime” loans. Why are lenders making these loans? Because (1) the borrowers are paying 9%-20% (you read that right) and (2) the market is not nearly as regulated as the mortgage market. In a world that has been yield constrained for years, subprime loans have been a bright spot for yield hungry investors.

In other words, all the factors that led to the Great Recession are happening again, just in the auto loan market. Yes, this market is smaller ($1.5 trillion as compared to the ~$10 trillion mortgage market). Yes, LTVs are lower in car loans. Yes, the loan sizes are smaller. That being said, as the market slides into a recession, and with inflation persisting, subprime borrowers will be pushed to the brink. As they start to default on their loans the pain will be passed to the investors in this market. This could push a large financial institution into bankruptcy (here’s looking at you, Ally Financial). And that starts to sound very familiar.

Have a great weekend, everyone!



The Insider: Parallels to the Great Recession or is it Deja Vu All Over Again?

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As readers of the Insider know, I am a voracious reader of the news. Recently a series of news items struck me as a pattern, and I decided to dig into the similarities between the setup to the Great Recession and now. I think you may find this as unsettling as I did.

The similarities I found myself by digging a bit into recent news articles (included for your reference below).


Subprime Mortgage Crisis, Its Timeline and Effect


June 2004-June 2006

Fed Raised Interest Rates



March 2022-Sep 2022

Fed Raised Interest Rates


Raising interest rates puts brakes on the economy and so often precedes economic slowdowns and turmoil.

August 25-27, 2005

IMF Economist Warns the World’s Central Bankers


July 2022

The I.M.F. warns that a global recession could soon be at hand


The IMF has a global perspective and gives a balanced and fair view of the global economic situation. Their economics bench is deep and when they issue warnings of this sort, it pays to heed them.

December 22, 2005

Yield Curve Inverts


August 2022

Yield Curve Reaches Most Inverted Level This Century


A normal yield curve is one in which short term rates are lower than long term rates. When the yield curve “inverts” (which it does only rarely), it means that the financial markets are thinking short term risks are high compared to long term risks. This often precedes a recession.

September 25 2006

Home Prices Fall for the First Time in 11 Years


October 2022

US home prices drop at fastest pace since 2009


Considering the vast amount of wealth stored in real estate, when prices drop across the nation, there is widespread pain.  Caveat this time: most homeowners have a lot of equity in their homes, which wasn’t true heading into the Great Recession.

November 2006

New Home Permits Fall 28%


August 2022

Single family starts drop 10%


New home permits dropping and single family starts dropping both signal distress in the housing market.


The Fed Doesn’t reduce rates enough to calm markets


September 2022

Fed hikes interest rates by a sharp 0.75 points despite recession fears


In the last cycle, the Federal Reserve (as became clear in hindsight) wasn’t aggressive enough in dropping interest rates. This unnerved the markets and the following volatility proved to be destabilizing. This time it’s a little different, but similarities exist. Now, the Federal Reserve is continuing aggressive interest rate hikes in the face of signs of an impending recession.

September 10, 2008

2008 Lehman Brothers credit default swap costs soar as markets bet against the bank


October 2022

Credit Suisse Credit Default Swaps hit record high as shares tumble


Don’t worry too much about the technical details of what a Credit Default Swap (CDS) is. Just think of it as a kind of insurance for (in this case) bond holders. It ensures that if you held Lehman Brothers bonds and those bonds were defaulted on then you would still get your principal and interest.  If the cost of the CDSs are soaring, it means that people were betting against the viability of Lehman as a going concern. Of course, Lehman went on to be a spectacular bankruptcy. Currently there are two banks that are under extreme pressure, as measured by the cost of their CDSs. One is Credit Suisse and the other is Deutsche Bank. The parallels to the Lehman situation are eerie.

September 2008

Stock Market Crash


YTD 2022

Worst YTD S&P 500 performance in 20 years (and that includes 2008!)


The stock market crashed in ‘08, but the stock market has been even worse so far this year. Yup.

September 16th 2008

Lehman Brothers bankruptcy; beginning of Great Recession





In 2008 the tipping point was Lehman’s bankruptcy.  Will it be Credit Suisse or Deutche Bank this time?

The timeline from the lead up to the great recession comes largely from this article from The Balance:

Let’s be clear about my message here. I am most definitely saying that there are uncanny parallels between the Great Recession and this period we’re heading into. I am NOT saying this is going to be the same case. Why? Because this time around lending standards are still tight, and there’s an enormous amount of equity in people’s homes. Last time around credit standards were loose and many people tipped into negative equity territory as soon as the market shifted.

Also, the world saw what happened when Lehman was allowed to fail the way it did last time. I do not believe that European regulators have the stomach for that particular flavor of turmoil with the war in Ukraine on their doorstep – not to mention the dire fuel shortages they will be facing this winter looking to be a certainty. In my view they will step in to bail out either or both banks if necessary.

Why does all of this matter to real estate in New York?

The first point is for buyers, and pertains to a clause in the contract called the funding contingency. If you are buying with a mortgage, it would be a very good idea to request a funding contingency in this parlous financial environment. The funding contingency allows the buyer to get their deposit back in the case that the loan commitment letter is issued, but the bank subsequently does not fund the loan. Typically sellers see this as highly unlikely and will allow buyers to have this clause without too much trouble. Here’s why it matters. When Lehman Brothers went down in 2008, the following day there was not one mortgage closed in the US. And no mortgages were written for quite some time. That’s because banks were circling the wagons around their balance sheets and fighting to survive. So rather than lending money they were keeping it to service their current liabilities.

If you were a buyer and the bank issued a loan commitment letter then Lehman failed, you were stuck. Without a funding contingency or a renegotiation of the contract, buyers could (and did) lose their contract deposits because they couldn’t afford to close on the property.

For sellers, we have no idea if there is going to be a Lehman event heading our way. What we can clearly see is that the risk is higher that it will happen. So if you think you want to sell, my advice is this: sell now, and sell quickly. Else be prepared to rent your property or stay in it until the next cycle upswing.

Have a great weekend, everyone!

The Insider: Using Market Cycles to Your Advantage

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If you have been tangling with real estate and the stock market as long as I have (since late ‘80s professionally), then market cycles start to look remarkably similar. Yes, they each have their specific flavors, such as distinct periodicity or amplitude, but the broad strokes are always the same.  That is because human psychology and market dynamics do not change.

With that in mind, in today’s Insider, I want to delve into how the sales cycle works in real estate and elucidate  how to use this understanding to your advantage, either as a buyer or seller.

Here is the model of a sales cycle.  I have overlaid the 2008 housing crisis and the Covid pandemic timelines on it so you can see what I mean when I say the structure of these things is always the same.


So let’s walk through this.

The end of the bull market. Every seller wants to sell at at the top. But actually before the top is the best place to sell.  Why? Because there is still a volume of buyers in the market and bids are still competitive.

This is the top of the market but by the time you think you are at 2, it’s too late to sell. Why? Because very little volume trades there. Buyers stampede out of the market faster than you think. So supply starts to pile up. Sellers who wait too long have missed their opportunity to sell in a seller’s market.

This is the most interesting part of the market for buyers, and the hardest for them to understand. Why do I say this?  Well in our market, it is very common for buyers to pay all cash. In a competitive bidding situation, financed purchasers get boxed out by cash buyers. So they bid and bid and don’t get any accepted offers much less signed contracts. However! As the market is dropping as it is in sector 3 of the sales cycle, buyers can take their time. Sellers are more likely to accept financing contingencies. Chance of being in a bidding war is dramatically lower. So financed buyers actually can buy things here, unlike in sector 1.

Buyers think that they only want to buy at the bottom, but the bottom is a chimera. Why? Because it lasts a nanosecond and very very few trades actually happen there. By the time buyer’s realize the market has shifted there are already bidding wars on everything of quality in the market. Buyers have missed their opportunity to buy in a buyer’s market. Financed buyers find they are once again being boxed out by cash buyers.

Let’s look at actual data in the following chart:

This is a compound chart, where the top half is supply and the bottom half is contract activity. In the bottom half, the yellow line is the historical average, while the blue line is actual data for that time period. These data span from 4th quarter 2019 to present.

You will notice at the bottom of the market (4), contract activity drops to a local nadir.  That’s what I mean by thinking that you’re going to buy at the bottom is a chimera. Almost nobody actually pulls that off. The historical average for this time period is 1,000 units, whereas in july of 2020 it was between 100 and 200 units.

From there (1) both contract activity and supply swell, but contract activity is greater than new supply so over supply starts to drop.

You can see in (2) strong contract activity. As this stage gets long in the tooth, total supply starts to swell.

Finally, in (3), contract activity drops below historical averages and supply starts aggressively accumulating. We won’t know until ex post facto whether this data picture is actually the sign of a market bottom, but given interest rates, a shaky S&P 500, inflation data and talks of an impending recession, it wouldn’t be surprising if it were.

Here are the takeaways, which are the same as last week:

If you are a seller, do it now, do it quickly, and price aggressively.

If you are a buyer, even though it seems like it’s early, now is the time to act. Waiting for the bottom will in all likelihood mean you miss your opportunity.

Have a great weekend, everyone!


Watch the live recap of today’s Insider with Mark Chin and Josh Rubin here:

The Insider: Data Dive Into Manhattan Real Estate Trends. “What should I do?” answered.

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This week I was reminded of the old Wall Street rule of thumb called “Three steps and a stumble”, which means that the stock market tends to decline if the Fed Funds rate moves upwards three consecutive times. It has relevance to the real estate market also, obviously. Having been through three massive 75 basis point increases in the Fed Funds rate (and the fifth consecutive increase in a row), there seems to be some decision paralysis in the market. The Insider is here to help you with a decision framework.

Let’s look at local market data and see what’s what.

Let’s start with new development supply, something the Insider mentioned in passing recently. Current units on the market = 862.

Source: Urbandigs

As you can see, the supply story is super clear here. It increased in a very strong trend from late 2012 to 2017. Since 2020, it has been doing the opposite. Notably the trend is still super clear. Supply is dropping and since the cycle from concept to sales in new dev is about a half-decade, it’s likely to persist in its current trend for a while. During this period expect developers to hew to their asking prices and be stingy with concessions (such as paying the transfer tax).

In the much broader resale market (current units = 6,337), the trend is far from clear.

Source: Urbandigs

As you can see from the chart above, there was a very clear data trend from 2014 until 2020. That was upended with the pandemic, and since then the “trend” has been clear as mud.  You can see in the data the chaos that the pandemic has made of, well, nearly everything.

What we can tell from the chart is that in spite of the fear in the market at the moment (I’m speaking anecdotally), the market is in fine shape, at current supply levels of the 2017-2019 period, and nowhere near the highs of 2020 or the 2009-2010 period (not on the chart but much higher).


In real estate, supply is a direct calculation and is simply the number of apartments on the market. Demand can only be measured indirectly, and the best that we have is contract activity. We don’t really know the number of people actively looking at real estate for purchase, and there’s no way to find out that number. But we can see how many buyers actually did buy something because every signed contract meant a buyer did something. Let’s take a look:

Source: Urbandigs

To begin with, notice that the data clearly shows the fall and spring seasonality of our market. It also shows how much more powerful the spring market is than the fall market. But both exhibit distinct waves of buying activity. If you were wondering if there are more buyers in spring or fall, you need to never wonder again.

More importantly, for the topic of today’s discussion, two things of note:

  1. Demand (as measured by signed contracts) is still higher than it was from summer of 2018 to fall of 2020
  2. Although the trend is currently falling, expect an upward bump anyway shortly due to the seasonal fall market effect.

A Combined Picture

Source: Urbandigs

This chart shows the ratio of in contract properties to listed properties. Higher numbers indicate a seller’s market, and the opposite is true for a buyer’s market. Intuitively this makes sense. If there are 100 apartments listed and 100 in contract sellers are in the driver’s seat (market pulse = 1.0). If there are 100 apartments on the market and only one in contract, buyers are in control (market pulse = 0.01).

The Market Pulse chart combines supply and demand into one view, and gives a better sense of what’s happening overall.

Here are our takeaways from this chart:

  1. We are currently in a balanced or neutral situation, after having spent the last two years in a seller’s market.
  2. The trend is definitely towards buyer’s market territory, but we’re not there yet.

—Washington Post


Here are the two relevant charts graphics. The first one shows where the housing markets are cooling (purple) and where they are stable (green). The second one zooms in on the greater NYC Metro Area.

Our region (including Manhattan) is exhibiting strong stability compared to other areas in the country. This does not mean that the zones in green are appreciating markets! Just that they are not dropping.

Just Tell Me What To Do

The hyper-local data points to a cooling market here in Manhattan but the effect is not particularly dramatic. Supply is similar to where it was in 2028-2019 which when we were living through it felt fine.

Demand is cooling from very high levels, but is still higher than most of 2018-2020.

With the third 75 basis point increase in the Fed Funds rate, there will be a cooling effect, which cannot be denied.

If You Are A Seller, Consider This

This graphic shows what happens to sellers that don’t adjust to market realities fast enough in a falling market. In the case above, seller’s initial price is just above the market price. Time goes on and the market drops. Seller finally does a price adjustment. Unfortunately this price drop does not take into consideration the reality of where the market is. So the apartment sits on the market. They finally do another price adjustment, but make the same mistake. It’s only on the third price drop that they get serious and drop the price enough to meet the actual market price. At this point they finally sell. As you can see they lose quite lot of money by not recognizing the market realities early.

If this looks overly theoretical, believe me: I’ve seen this exact scenario play out hundreds of times first hand. So if you believe the market is going to go through a prolonged decline the message is: sell now and price aggressively. Being passive and waiting will only hurt you.

If You Are A Buyer, Consider This

We are in a balanced market for the first time in two years. It would be tempting to just sit and wait but here are the conditions under which you should buy now:

  • You have a compelling life reason to do so
  • You can afford it
  • You find a well priced apartment or motivated seller
  • You plan to own your apartment for more than 5 years
  • You stick to your guns on negotiating
  • You are financing (as rates look like they’re going higher before they go lower)

Timing the top or bottom of the market is almost impossible. Finding a wide window of time and conditions in which a transaction makes sense is much easier. Just make sure it makes sense and you’ll almost certainly be doing the right thing.

I hope this helps you think through your current situation. As always if you want more perspective or help with a transaction, contact us.

Have a great weekend everyone!


Watch the live recap of today’s Insider with Mark Chin and Josh Rubin here: