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