Selling Your Co-op or Condo? Think Price Chop.
Sept. 19, 2018 — New study says housing market recovery has led to false optimism.
A decade after the collapse of Lehman Brothers helped usher in the global financial crisis – the worst downturn since the Great Depression – StreetEasy has released a new study that reveals a linked pair of unpretty truths. Since the New York City market bottomed out in November 2011, housing prices have risen nearly 30 percent. But the recovery of the housing market has been far outpaced by the galloping stock market, leaving many sellers with unrealistic ideas about what their apartments are worth.
The headline on the StreetEasy study says it all: “10 Years After the Crash, False Optimism Pervades NYC Housing Market.”
"While New York City has come a long way in the decade since the financial crisis, the city's residential market dynamics seem to indicate that faith in ever-increasing real estate prices is once again unshakable," Grant Long, StreetEasy's senior economist, writes in the report.
Despite this persistent belief that homeownership is a great investment, other investments, such as putting money in the stock market, were far better. Since the nadir of the housing market in 2011, the S&P 500 returned 125 percent on investment. That comes out to a 13 percent annual return, versus New York real estate's 3.8 percent return.
Long continues, “Those who bought homes after the crisis and listed them for sale in the second quarter of 2018 sought a median 7.6 percent annual return. But those who actually managed to sell earned only 4.8 percent, with more than half who have since sold accepting prices lower than their original asking price.”
In other words, the people who are having success selling co-op or condo apartments in New York City today are the ones who are willing to listen to those two deadly little words: price chop.