Saturday, February 4, 2017

Our End of Year Newsletter. What's Next?

January 28, 2017

Happy New Year!

Now that another 365 days are behind us, I thought I would provide you with some thoughts on where we've been, where we are, and what I think is in store for 2017.

To begin with, 2016 was a very good year for us which means it was a very good year for our clients. We managed to get about $80M in deals closed with about a dozen more contracts outstanding as we moved into 2017. If such a thing as a "normal" market exists, 2016 came pretty close to representing one. I believe it was the character Gordon Gekko (who paraphrased Ivan Boesky) proclaiming "greed is good", but with our model, normalcy is good (declining slightly with a dollop of seller anxiety even better!)

2014 to early 2015 has proven to be the toughest years for buyers. However, the good news is that although the going was tough, prices have, for the most part, actually risen since that time. So don't read this and think "Damn, great I overpaid." It is my opinion that no one who has purchased since The Burkhardt Group began representing buyers in 2009 has overpaid. I remember all of our sales and I can recall everyone operating with a cool head relative to time and circumstance.

We had a contentious election that looked to be wrapped up by Hillary until late summer. Around this time, perhaps coincidentally, we saw the market start to sputter. We talked to clients about the seasonality effect (NYC is a market of distinct seasons), but we could not ignore what I referred to as 'pre-election anxiety.' Then it happened, I fell asleep on election night at around 10pm and when I woke up and turned on my phone, there it was: "Donald J. Trump has won the election." We then saw the other side of that anxiety, the post election version. However, once equities started their move up, we saw a surge in buyers come out of the shadows and bid like there was no tomorrow. We logged in thirteen offers about a week post 'The Donald' with only three getting to contract. Bidding action was hot, all of a sudden offers we thought were a lock were being challenged by all cash, above ask non-contingent deals-- in December of all times!!! I had no rest in December.

In 2017, I see a steady market with what I think will be a slight bias towards buyers. There is no reason to think this market will 'crash'. That said, there are very few folks who can accurately predict a collapse; look at how many missed the signs pre-2008. Why fear a disruption anyway? It's always been an opportunity. The only thing I know for sure is the market goes up and down with the long term trend being up. Yes, it stinks to own any asset in a falling market, but as long as you can afford your payment, you can literally ride out the storm in the comfort of your own home.

Also, without getting political, some of the new administration's policies and people seem to be pretty pro-business (sarcasm). Will this unleash the dormant, so called 'animal spirits' of the American economy? Time will tell.

Over here in our little world, we are picking up where we left off last June (before the election anxiety/summer doldrums). We have a significant number of clients who remain committed to purchasing real estate. I am receiving a lot of emails and calls from buyers who are excited that they are seeing more listings available and are excited by the prospect of negotiating under 'normal' conditions instead of stressing about submitting a highest and best offer. Some of these buyer have been in hibernation since 2015 and are now ready to get back in the game.

I was happy to read Noah's summation of 2016 on UrbanDigs as I felt it was very much in line with what we were experiencing and communicating to our clients during this time. I have linked to his blog post here.

In summary, we saw some softening with new developments and were able to either negotiate a bit on price and/or closing costs on some units. Still this was the exception, not the rule.

I definitely felt that we made some very good deals on homes priced above $4M. Without naming names, I think all the buyers we represented did exceptionally well here.

We sold more studios homes this year than in any previous year and almost all below $500K.

We saw less softness in homes below $2M, however, it was a much improved market compared to 2014/2015. And when I say improved, I am referring to the ability to get to contract with less stress and interference from other buyers.

Overall, 2016 was a nice healthy market for our clients and we believe we will see more of the same for 2017.

UPDATE:

I wrote the above about 2 weeks ago, and here's what we are (in short) currently experiencing: a very,very strong market. Since the initial writing of this current newsletter, the real estate market has shown improved strength and thus we have struggled to get recent offers to contract. It is very competitive out there with renewed calls for 'highest and best' offers on many properties. This is not a completely widespread trend though, the strength we are seeing is mainly confined to the higher value properties. To clarify, in 2007/2014 we saw aggressive buying across all classes of homes (including pure crap). This current hot streak is limited to best in class homes, this is where we are seeing all the hyper-action.  So, let us see where this rally will take us, all things considered, this could be a very interesting year.

Dow 20K certainly was adding fuel to the fire. However President Trump is a wildcard and who knows what he'll tweet next or what executive order will be signed. When it was all about business the markets were loving what they were hearing and reacted. I think the President will learn (maybe the hard way) that running a private company and the US are very different things. One has to proceed prudently as all things are more interconnected than ever; where there is an action, there will be a reaction. Some (mainly re brokers) like to make the argument that a volatile stock market is a good reason for owning real estate. However in NYC the two are closely intertwined especially since down payments are significant, comp can be related to stock price and co-ops require large post close reserves. It is too early to know where we are going, but I think we need to pay attention to a number of things here. That said, I am hopeful for positive outcomes for the country. 

Thanks for doing business with us. 

Sincerely,

Keith Burkhardt
The Burkhardt Group
www.theburkhardtgroup.com
917.770.4951

304 Park Avenue South 11th fl.
New York, NY 10010

Saturday, January 28, 2017

Manhattan Charts Snapshot

Wednesday, January 11, 2017

Co-op board Rejections

http://cooperator.com/article/top-dozen-reasons-for-co-op-board-rejections

Thursday, January 5, 2017

Thank You for Helping Us Help Another Child! First Sponsorship of 2017!

Baby-Love Alexis Sponsor a Child

Baby-Love Alexis

Child Number: 134
Birthday: September 5, 2011
Gender: Male
My Story: My name is Baby-Love- yes that is my real name! My mother died not long after I was born in 2011, and my father brought me in his arms to New Life Children’s Home when I was very sick. I suffered greatly from malnutrition and was very tiny. My father did not think that I would survive, but now I am getting healthier, thanks to the kindness of God and great care here at New Life. I enjoy playing with the other children, but I do not yet speak well, and for that reason am unable to attend school.

Thursday, December 22, 2016

Thank You for Helping Us Help These Kids!

With each deal, we will sponsor a child at the New Life 4 Kids home in Haiti. I want to personally thank all of our wonderful clients for helping us help these children! There is so much need around the planet, including here in NYC (we are also supporting The Henry Street Settlement). And it was not easy deciding where to assist, Cheryl (my wife) met a woman associated with this home and the stars just aligned. This is our first, meet Lovena;


Lovena Alerte Sponsor a Child

Lovena Alerte My Story:

My name is Lovena and I am so happy to be here at New Life Children’s Home. I came here in 2008 when I was just 3 years old. I came from the Pestel area where my family struggled to find food, clean water, and to provide the medical care that I needed. When I got here to New Life I was unable to talk, walk or even stand. My legs were so floppy! With several years of good food, loving care and the right medicine, I now can walk! In fact, one of my favorite things to do is to sweep the yard. It makes me feel good that I can help and be in such a happy and safe place. It would be so great to one day be a nurse and help others.

Wednesday, December 21, 2016

Fearing even higher rates?

http://www.cnbc.com/2016/12/21/borrowers-brush-off-rising-rates-pushing-mortgage-applications-higher.html

Tuesday, December 20, 2016

We Have Finally Settled on Two Charities to Support

As you can imagine this was no easy task. It seems for all the joy and abundance in the world, there is an equal amount of suffering. I'll keep it short; I stayed local with The Henry Street Settlement, they have been assisting New Yorkers since 1893 and are a highly rated charity. My wife met a woman at one of my daughters activities who had a connection to Haiti. The first hand stories were heart breaking! After doing our own research, which demonstrated the worthiness of the angels running this home for children, we jumped on board: New Life 4 Kids.

And again, thank you for all the kind referrals and support!

Happy Holidays!!

Keith Burkhardt