Merrill, and Lehman and AIG…Oh My!
It has been a tough day in the financial markets, one of those days which will probably make history. As of today, three of the five major independent investment banks which formed the core of business activity on Wall Street over the last decades are gone, at least as we knew them. It feels like the end of an era.
At times like this most buyers don’t want to make real estate decisions. They want to move to the sidelines and see what happens next. Here’s what I predict will happen next:
1) opportunities will appear for those bold enough to take them. The buyer pool will be smaller and some sellers will be under more pressure as a result
2) inventory will increase, but not dramatically. On days like today we can appreciate the vigilance of those finicky co-op Boards. With their 50% down requirements and careful financial scrutiny, they have made sure Manhattan is one of the most liquid residential real estate marketplaces in the world. Most people, even if they lose their jobs, will not have to sell their home.
3) the ramifications of today’s triple threat will be felt for months to come. The credit crisis is like a car crash unfolding in slow motion. What happened today, and what happens in the ensuing weeks, will hopefully mark a bottom and allow liquidity to begin to flow back into the marketplace. Time will tell.