Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Tim Stenebek on Bloomberg Radio. Met you remember last week
Speaker 1: we talked about how how more Manhattan buyers were paying
Speaker 1: cash in at any other time on record. It was
Speaker 1: sixty five percent of purchases in the second quarter. We're
Speaker 1: done without financing. This was according to Miller, Samuel and
Speaker 1: Douglas Eleman.
Speaker 2: Yeah, because financing is so expensive. If you have the cash,
Speaker 2: you're more likely to use that, because otherwise you're going
Speaker 2: to be paying six or seven percent on.
Speaker 1: A mortgage exactly. So all right, let's get an update
Speaker 1: on what our next guest is seeing firsthand. We welcome
Speaker 1: back Barbara Fox. She's president Fox Residential Group. She's an
Speaker 1: Upper Eastsider herself, although not born in New York City,
Speaker 1: joins us here on the East Side in our Bloomberg
Speaker 1: Interactive Broker studio. Hello, Hello, how are you?
Speaker 3: I'm well? How are you guys?
Speaker 2: We're doing great. We're surviving the heat, I guess heat
Speaker 2: and then the rain here. How has the market been well?
Speaker 3: I wish that our market this summer was as hot
Speaker 3: as the weather outdoors. I really do.
Speaker 1: Is it down from last summer.
Speaker 3: It's down from last summer. Yes, it's not as as
Speaker 3: buoyant as it was last summer. It is the spring
Speaker 3: market and the early the spring and early summer markets
Speaker 3: were a little were pretty active. They were they were,
Speaker 3: they were, There was a lot of activity, There were
Speaker 3: sales being made, there were things coming on the market, surprisingly,
Speaker 3: but mainly it's that was in the smaller units one, two,
Speaker 3: and even three bedroom units, not the super luck stuff,
Speaker 3: but the lower the lower price stuff. But that's fallen
Speaker 3: off now. It's we're in the summer doldrums.
Speaker 1: Is that?
Speaker 3: Oh?
Speaker 2: Sorry, no, no, I mean I was going to ask
Speaker 2: about you know, Carol was talking about the fact that
Speaker 2: more buyers are cash now than ever before, and well,
Speaker 2: it's a very expensive place to buy real estate, so
Speaker 2: that means a lot of cash in these transactions. Is
Speaker 2: it only the very wealthy that are transacting right now?
Speaker 3: Actually it's not. The very wealthy always transact and they
Speaker 3: can pay cash. However, the bulk of the people who
Speaker 3: are buying in New York City really can afford to
Speaker 3: pay cash or don't want to pay cash. They do
Speaker 3: it if they have to because of the interest rates.
Speaker 3: The problem with the market right now is that these
Speaker 3: high interest rates are causing people to be forced to
Speaker 3: pay lower prices, and there is a there's a juxtaposition
Speaker 3: between what the buyers think and what the sellers think
Speaker 3: that still exists, that's very much in existence now. It's
Speaker 3: it's really as it's a difficult situation, and the sellers,
Speaker 3: who are pretty savvy in New York, have been gotten
Speaker 3: so used to these very high inflated prices that they
Speaker 3: aren't really coming down to reality at this point, and
Speaker 3: that the only way to do transactions. I mean, the
Speaker 3: buyers are very cautious. They're not going to overpay. They
Speaker 3: will look at a million things.
Speaker 1: Because they can. If they've got a higher interest rate
Speaker 1: and a mortgage, right, they've got to kind of reduce
Speaker 1: what they can pay essentially for the pass.
Speaker 2: Indeed, all right, so what kind of properties are moving
Speaker 2: then right now? Which ones are are are people willing
Speaker 2: to actually sell?
Speaker 3: Well, the people that are selling. It's really an interesting
Speaker 3: market right now because most of the people who are
Speaker 3: selling are people. There's not a lot of products coming
Speaker 3: on the market because because of the people, because of
Speaker 3: the interest rate situation. If people are moving, they don't
Speaker 3: want to have to pay a higher interest rate for
Speaker 3: a new apartment, so they aren't there's not a lot
Speaker 3: of movement in the in the market.
Speaker 1: You're saying there's no movement or what? What does sell? Less?
Speaker 3: Expect? It does sell, and people are always having to
Speaker 3: sell for various reasons, moving or whatever. And what sells
Speaker 3: fastest are new developments and the nicely renovated apartment.
Speaker 2: Is that because if you're a new developer, can you
Speaker 2: figure out a way to give people a four or
Speaker 2: five percent mortgage rather than a six or seven percent mortgage?
Speaker 3: I present, I don't really think that's happening right now,
Speaker 3: but I'm sure what.
Speaker 2: Is the diff happen between now? Barbara and you're not
Speaker 2: nearly old enough, But some people remember the eighties when
Speaker 2: rates were not only this high, but a lot higher.
Speaker 3: I remember, I remember in the seventies and eighties when
Speaker 3: the rates were eighteen percent.
Speaker 2: How are people trading properties at those levels?
Speaker 3: The problem is that we've gotten used to two and
Speaker 3: three percent interest rates, and it's very hard to go
Speaker 3: back and think of, you know, six and seven percent.
Speaker 3: But the interest rates have more than doubled in the
Speaker 3: past couple of months. And that's what's really scary to buyers.
Speaker 1: But still down from a historical basis. That's what's kind
Speaker 1: of crazy. Yeah. Remember Mark Mike Snyderho used to work here.
Speaker 1: He used to talk about his mortgage rate in the seventies,
Speaker 1: eighties or eighties. I guess it wasn't He would talk about,
Speaker 1: you know, high teens.
Speaker 2: Now that was on probably like an eighty thousand dollars
Speaker 2: house in Columbus, Ohio, but it was still high for
Speaker 2: them at the time. It was a lot.
Speaker 1: It was a lot when people do like we used
Speaker 1: to talk about foreign buyers in terms of real estate,
Speaker 1: do we see that? Is that?
Speaker 3: And it kind of there's not a lot of foreign
Speaker 3: buyers around right now, but there used to be, right,
Speaker 3: Oh my god. Yeah, the market was fueled a bout
Speaker 3: foreign buyers in the past years. But it's it's much
Speaker 3: slower now. There are always people coming into New York
Speaker 3: and needing to move and buy and whatever, but it's
Speaker 3: much it's much less, much many fewer buyers from afar.
Speaker 1: Can I answer a question, Yeah, And I was like,
Speaker 1: so what about Brooklyn, because I feel like Brooklyn, if
Speaker 1: you've got kids and families and you're staying in New York,
Speaker 1: you any thoughts on Brooklyn.
Speaker 3: I don't really do Brooklyn either.
Speaker 2: I get that the city completely.
Speaker 1: What do you guys sexy in the city you carry?
Speaker 3: I have people in my firm that do Brooklyn, but
Speaker 3: they know Brooklyn, and I really don't want to even
Speaker 3: speak on it because I don't know what that wells.
Speaker 1: So when you look at all, right, if you look
Speaker 1: at Manhattan specifically, the hottest part of the city, is
Speaker 1: there an area.
Speaker 3: Area, Downtown remains probably the hottest area with the highest prices. Interestingly,
Speaker 3: and all areas downtown, there are not any specific areas
Speaker 3: that are higher than others.
Speaker 1: And I love downtown.
Speaker 3: Yeah, we had a great story of downtown.
Speaker 2: We had a great story about a Grench village loft
Speaker 2: that's for sale right now. It's only four million dollars
Speaker 2: and I say only because it's a six thousand square
Speaker 2: foot loft. And the problem is the tenant, kay is
Speaker 2: only twenty three hundred dollars a month. You know, it's
Speaker 2: rent stabilized, and if you want to buy the thing,
Speaker 2: you have to I guess wait until the tenant either
Speaker 2: dies or moves out. Yeah, his or her own volition.
Speaker 2: Do you come across lot of issues like that because
Speaker 2: that seems so weird, but it happens in New York.
Speaker 2: Everybody knows somebody who pays nothing for an apartment because
Speaker 2: their parents got it rent stableize. Is that a problem, well,
Speaker 2: a lot.
Speaker 3: Of It's not a problem for us per se, but
Speaker 3: it is a it's a problem for landlords in the
Speaker 3: city because they have a lot. In some of these buildings,
Speaker 3: they have rent rent stabilized, rent control tenants. I mean
Speaker 3: they have tenants that are I actually went to see
Speaker 3: a townhouse recently that was many six units and the
Speaker 3: one or two of the tenants we're paying under three
Speaker 3: hundred dollars a month for these one bedroom apartments and
Speaker 3: they had been there for fifty years. So it does
Speaker 3: still exist in the city.
Speaker 1: I know people who went to court to like you know,
Speaker 1: had run control.
Speaker 3: All right.
Speaker 1: So I think about our audience as I like to
Speaker 1: ask this question. But they're smart, they're investors. We bring
Speaker 1: on different guests to kind of help really put together
Speaker 1: what the economic outlook is and the market outlook based
Speaker 1: on what you're seeing, do you think we're moving towards
Speaker 1: a recession? Do you think I don't know, what would
Speaker 1: you tell our.
Speaker 3: Audience you know, it's I'm really probably not qualified to
Speaker 3: speak about the economy, but market cycles. That's market cycles.
Speaker 3: And what I see right now is there there's a
Speaker 3: disconnect between buyers and sellers, and which is what's causing
Speaker 3: the rift in the market right now. And once the
Speaker 3: buyers buyers have to understand that they are in a
Speaker 3: very unique position right now with regard to New York
Speaker 3: City real estate purchasing, because they are on a trend
Speaker 3: where the prices are coming down. They have been going
Speaker 3: up for twenty years and they're coming down a little now,
Speaker 3: not remarkably, but they're coming down. Sellers are much more flexible,
Speaker 3: or they need to be much more flexible in priced
Speaker 3: to make these sales happen. So once the buyers understand
Speaker 3: that they can get good buyers, they're going to move
Speaker 3: into the market because they don't want to miss this
Speaker 3: market right. And then the sellers hopefully are working in
Speaker 3: concert with this and they think, well, if I don't
Speaker 3: take this offer with yeah, it may there may not
Speaker 3: be another one down the road.
Speaker 1: So I'm looking at this sixty million dollars single family
Speaker 1: townhouse at five E sixty fourth Streets, So maybe they
Speaker 1: need to come down a little bit, Matt. It has
Speaker 1: seven bedrooms.
Speaker 2: Yeah, and what a great address. Also, you're right across
Speaker 2: the street from Central Park right there.
Speaker 3: It's the it's the prime neighborhood. But it's a lot
Speaker 3: of money. And but you know what, there are people
Speaker 3: that buy these buildings. We still sell them and they're
Speaker 3: they're still going. And for some reasons that are not affected.
Speaker 3: There are taxes.
Speaker 1: Only sixteen thousand dollars in this house.
Speaker 2: I don't get that.
Speaker 1: I don't know. I got to work a month. That's
Speaker 1: a month, by the way, is it a month?
Speaker 3: I assume definitely.
Speaker 1: We get to run. Barbara. Always good to check in
Speaker 1: with you. Barbara Fox over at Fox Residential.
Speaker 3: You're Matt. Thank you.