Ask The Experts | Pricing Effects from the Second Avenue Subway

There’s a saying in the investment world: “buy on the rumor, sell on the news.” No, this isn’t an encouragement to listen to rumors. Instead, it showcases the general behavioral dynamic of “pricing” in good news before it fully materializes. The idea is that, once the event actually occurs, once the good thing is already in place, the upside of its benefits is already priced in so it’s time to sell.

This is also the case for the 2nd Avenue subway station, as we’ve been asked by so many looking on the Upper East Side.

It would seem logical, now that the new stations are up and running (with much praise and fanfare, might we add) that apartments along the new subway line would experience a sustained uptick in prices immediately and for several months after the ribbon cutting. After all, current and future residents would experience a substantial increase in their quality of life based on both the proximity and utility of the new line.

That said, condo prices experienced only a 5.12% increase near the station from 2016-2017, and are not expected to pop that much further. Why? Because the increased value of the line was already priced in. Roughly speaking, once some initiative is underway, the relative value of that initiative begins to be priced in roughly 1/2 to 2/3 of the way towards its completion … when the light at the end of the tunnel can be seen (pun intended). At that point, the experience of the utility of that thing merely catches up with expectations.

As you might imagine, however, this is a bit different for the rental market, which is representative of a much more transient demographic. During construction, renters who could pay more to live somewhere else did; renters who were willing to put up with the dust and the noise in exchange for lower relative rent did. Now, those rents are likely to jump up to the level of median rents in the neighborhood, plus a bit more due to the premium from the added transportation options. This is all relative, of course, and based on the overall health and trajectory of the rental market, which at this time is marked by concessions due to its overall softening.

At The Core | Have We Hit an Equilibrium?

Ahhh, the sweet, sweet smell of equilibrium! (Ok, it doesn’t actually smell but it feels right.) What do we mean? For the first time in a very long time, it feels to us that we’ve reached a very nice equilibrium between seller and buyer behaviors.

  • Sellers are waking up to a new reality of more down-to-earth prices and adjusting their strategy accordingly. (Out-of-sync seller behavior usually looks like pricing above the market, thinking the property can sell in a few weeks, and refusing to engage with buyers looking to negotiate.)
  • Buyers, in turn, are back out pounding the pavement, actively looking for the right opportunity. (Out-of-sync buyer behavior usually looks like buyers giving up altogether, refusing to compromise on property desires, waiting things out endlessly for “the right apartment” to appear, or not moving quickly enough.)

Wouldn’t you know it: this equilibrium has resulted in a strengthening of the market. Even in a typically slow month, January came in with very healthy activity. This is in no small part due to the pent-up demand that built up during the uncertain Q4 releasing in January. So many people were holding their breath (and their wallets) … until they decided that sitting out of the game altogether was not in their best interest. And no, the sky didn’t fall. Truth be told, prices are softening a bit, but we need to remember that prices don’t keep increasing forever, especially not as steeply as they have for the last few years. We are in a far more sustainable new norm, and we welcome it!

Monthly Gem | The Inkwell

If you’re loyal readers of The Apple, Peeled, you are experts in the market. You know that, over the last few years, a vast majority of new developments have come in above $2,000/sq.ft., with price-tags well above the $5 million mark to start. It’s our pleasure, therefore, to offer up an outlier to this trend via our Monthly Gem: the Inkwell, in Hells Kitchen. At approximately $1,400/sq. ft., the building represents an amazing deal for a new development in a rapidly transforming section of Hell’s Kitchen. Formerly a schoolhouse, the building boasts 13-foot ceilings and offers up a modern-industrial aesthetic, with refined mixed materials like American Black Walnut floors, bronze door hardware, Calacatta marble vanities and steel-framed cabinetry. A part-time doorman and paired with fantastic amenities make this building an intimate, off-the-beaten-path offering for those who value high-end living without paying for the extras they would never use. With the pipeline of developments in this pricing tier so narrow, if you’re in the market, Inkwell is a must see!

Apple Bites | Daily Provisions

Danny Meyer debuted a new restaurant this month, and it’s already gaining a huge following. Daily Provisions was envisioned as a “take-home” version of the key conceptual ingredients behind Union Square Café … a distilled version, if you will, of the much famed eatery. Located at 103 East 19th Street, it offers items that one would consider eating every day (ergo its name). While the pastries, sandwiches and in-house breads it offers can all be eaten at its bar seats and tables, the idea is to meet the culinary needs of those who live and work in Gramercy … a local stop for provisions. According to the “experts” here are the must-try items on the menu: the Cruellers, Breakfast Gougeres, Sprezzatura Loaf, Rotisserie Chicken and (the show-stealer) Chicken Milanese Sandwich. If you stop by, send us a note to let us know which is your favorite!

Date Your City | The Guggenheim

We live in this amazing city filled with so much to do, each and every day, as outlets for so many interests. Yet we often fail to take advantage of its many cultural offerings, even though they’re in our backyard. So we wanted to draw your attention to a wonderful reason to pay the Guggenheim Museum a visit: Visionaries: Creating a Modern Guggenheim. The exhibition starts February 10th and continues until September, so you have plenty of opportunities to partake. It seeks to explore almost a century’s worth of original work, celebrating not only the artists but the patrons that helped define the identity of the Guggenheim Museum, itself. In the rotunda, you will be able to see more than 170 works from Cezanne, Chagall, Kandinsky, Picasso and Pollock, among others, which were drawn from the Solomon R. Guggenheim Foundation’s permanent collections in Venice and NYC. And all of this is in honor of the foundation’s 80th anniversary; go take a part in its celebration!