Busy near the bottom

No one knows where the bottom is. So for most buyers of Manhattan real estate, the question is simply “Are we close enough?” In recent weeks it appears that for many the answer is yes.  Several factors are at work here:

First, the flood of post-crash apartments so many were expecting has never materialized. Property absorption rates are down, inventory is certainly up, but those “Bear Stearns apartments” and “Lehman Brothers apartments” everyone was talking about have failed to pour onto the market and further depress prices (and consumers!)

Second, with residential properties now selling at anywhere from 15% to 30% below their historic highs (the rule of thumb is the bigger the property, the bigger the reduction), many buyers who were priced out two or three years ago are seeing value in the marketplace and stepping back in. Bottom or no bottom, they are willing to bid and to buy, especially with the historic lows in mortgage rates. Since most buyers care most about their monthly payment, a great mortgage can be worth 5% to 10% in the price. 

Third, New Yorkers have a famously brief window of tolerance for delayed gratification. Sooner or later (preferably sooner) they want to move on with their lives. They are still marrying, divorcing, having babies, getting on with life. And if the perfect property to suit the new phase is right in front of you, and 25% cheaper than it would have been a year ago, for a lot of them that is enough.

Many buyers still want to wait for the second quarter, or for yet another shoe to drop economically, before making a purchasing decision. But for an increasing number of others, today’s values are good enough to entice them back into the game.