Sales in Manhattan - What's Going On?

While it seems every paper and website has been quoting the same numbers regarding sales in NYC (most relevant to us is Manhattan) - there is a subject that needs to be acknowledged - taxes - the lack there of and how prices might be effected.



In at nutshell -- according to analyst reports from StreetEasy, the sales are: fewer $1million Manhattan apartments traded in the first half of 2008, than in the first half of 2007. However, almost one out of every two Manhattan apartments sold in the first half of 2008 was for at least $1million. Of course the numbers are twisted by 15 CPW and the renovated Plaza closings. But it’s all - interesting to think about.



So, while we have product - there are no fire sales.



August is ALWAYS a great time to buy because traditionally the market is at its “softest” -- sellers are nervous that their property is still sitting, and prices usually drop to compensate. But we saw a bidding war on an UWS two bedroom property over last weekend. Fully renovated, the property appeared at $870,000 - a GREAT price. Promptly 30 parties appeared at Sunday’s Open House - offers flooded in - driving the price 100K above asking - accepted - with three back-ups. As we say - HELLO - smart agent - good work.



But an announcement occurred today. Mayor Bloomberg stated that Wall Street’s mortgage losses have grown so large that some firms may pay little or no taxes for years, widening New York City and state deficits and challenging their ability to provide services.



Some companies are seeking refunds from the city on taxes they paid ahead of time, saying losses have cut their tax liability to zero. The banks pay tax on 110 percent of earnings in advance as a “safe harbor,” protecting against penalties for underpayment.



“It will be a number of years before Wall Street starts paying taxes again,” the mayor said at a press conference yesterday in Manhattan. “They will carry forward all of those losses.”



Now - what also needs to be remembered is that we have in the City a good two years of property tax surpluses that accumulated over the past crazy, bonus years in real property sales. That cushion does assist in the total scheme. The Mayor stated “services” and I think perhaps there should be some thought of belt tightening on many of our public programs our population enjoys.



According to State Comptroller, Thomas DiNapoli, financial firms posted $501 billion in write-downs and credit losses worldwide since the start of last year, a figure the World Bank predicts may rise to $1 trillion as the credit squeeze sparked by the subprime market collapse worsens. The tax drain in New York, where Wall Street accounts for 20 percent of state revenue and about 9 percent for the city, will have an effect.



“If the World Bank’s prediction that the large investment banks will book up to $1 trillion in write-downs because of the mortgage crisis is true, then Mayor Bloomberg is absolutely right,” said Lynn Turner, former chief accounting officer of the U.S. Securities and Exchange Commission. “These guys won’t be paying taxes for some time.”



Do I see this as a call for alarm in our real estate market? No, I don’t. Not yet. That cushion is going to cover for a while - but there’s always the fact that it can be siphoned off fairly quickly to areas compensating for a lack of income.



As we enter 2009 -- I want to reconsider all of this.

I have such a headache

I just got off the phone for a second time today with a person in a relatively high position in their firm wanting to know what's going on in our market.

Yes, I have such a headache.

I do get a bit tired of people equating what is occuring in the rest of the country with Manhattan and wanting an explanation as to why they don't seem to be able to get that two bedroom home for 200K less than the asking price.

Please forgive me but there's a reason for the adage, Location, Location, Location! I've lost count of how many times I've said this, wrote it, but give me a property in great condition in a great location and unless it's absurdly overpriced, it's going to sell..

I think I'm getting too cranky here today..