Bidding in a Market That Buyers Feel 'Should' Be Fearful

i have a few friends that are in the market to buy manhattan apartments and i can tell you that they view this time as an opportunity.

in their mind, opportunity means they plan to buy low.

Hey Paul...yes, I have clients in same boat. I think its fairly widespread. Thanks

I'm a buyer but my time window has opened to 1-2 years. No reason to take the plunge b/c you are looking at at least 5-10% losses (not including transaction charges). Might as well sit and wait. BTW I am looking at the condo market where the cost/rent ratio is way out of whack. Coop market may be differnt.

Give the market some time to adjust. Until recently, there was a lively debate as to whether the NYC market would go down. Now the debate has moved to how much.

Bearish articles are just starting to appear. Inventory is just starting to build to "excess" levels. Time on the market is growing. All of this will affect seller psychology in time.

keep it coming guys! What are you all seeing out there or if you are a buyer, what is going through your mind?

Having sold our condo last fall (in a bidding war, $100K over ask) my wife and I are sitting pretty in our luxury rental. We are paying only a fraction of the monthly costs that would have been required had we purchased an equivalent apartment last fall (oh, and we're certainly not worrying about having "bought at the top!"). We have plenty of cash and perfect credit. And we are waiting for a buyer's market. Yep, it'll come, no doubt.

I agree with everything in the articel, however I think there are things that are taking place in the credit markets that would push prices down in Manhattan even further. There are a few desks that I work with, including some people on our desk, that think you could see price drops of 20-30% in Manhattan. The combination of less qualified buyers in the market place, harder to get/qualify for mortgages, higher rates on Jumbo mortgages, negative wealth effect, increasing inventory, and less foriegn buyers coming into the market, as Europe and Asia look to be in as bad or worse shape then we are combined with a strengthening of the dollar would push ample buyers out of the market. I could be wrong, but in the early 90's inventory levels hit about 10K, and this situation is worse then at that time. In addition to all this, New York States forecolsure laws were amended with an additional 90 days, which pushes any foreclosure problem out further. I certainly think in this type of market, some drastic changes could be possible for people flush with cash and good credit.

I meant changes for the housing market and opportunity for people with cash and good credit. One extra point, Bonuses will be down around 40% across the board at most banks, if people even get them. In fixed income, it will be close to 0 maybe a little more. Plus, the pay scale will probably change going forward for most people that work on Wall street. The old model of revenue generation will not be in effect for some time.

I meant changes for the housing market and opportunity for people with cash and good credit. One extra point, Bonuses will be down around 40% across the board at most banks, if people even get them. In fixed income, it will be close to 0 maybe a little more. Plus, the pay scale will probably change going forward for most people that work on Wall street. The old model of revenue generation will not be in effect for some time.

My wife and I live on the UWS, and have been actively searching for the past several months in Garden City, as well as in Brooklyn and on the UWS. The listing prices in GC are still silly and the homes are not moving - and of those that are selling, many are at a much reduced price. At an open house last week in GC for a home that came on the market a few days before, the broker advised that the price had already been reduced $100,000. As for the UWS and Brooklyn, we haven't seen Sellers' blink much yet in terms of the listing price - but perhaps that is yet to come. We keep on seeing the same places available week after week without a price reduction - its almost laughable in some respects.

You touch on a factor of the real estate market that often gets overlooked - buyer perception. The market is down, yes, but it isn't as bad as people perceive it to be. We need to restore consumer confidence so people will be willing to make the plunge into a home purchase.

I'm seeing a lot less "anchoring" by sellers in this market than I saw when I started in 1992. Sellers are listening to those of us who are on the front lines and less to reports that their homes are worth more than they were last year...NOT! Buyers are already seizing opportunities albeit cautiously and sellers are much more inclined to negotiate at a greater discount from list than they have been in 15 years. The sellers who have an irrelevent price in their minds do indeed have to let go and listen to the market.

thanks Doug! Great comment and agreed.

sometimes perception is the reality...part of the problem is that some homeowners believe that their homes are worth more than they actually are...you need a reasonable willing buyer AND a reasonable willing seller to get things moving again...I'm ready to buy, now I just need to find a reasonable seller.

Noah,

Would you happen to know if Rents have declined significantly in the Manhattan Market?

Might be helpful to break down the rental trends based on lux and non-lux. Apparently, in the downturn, the distinction between costly amenities versus less expensive amenities are blurred. So, I would expect lux rentals to go down significantly but non-lux to continue to stay steady.

As an Investor, I'm more interested in purchasing for profit. So, the stability of the income stream as the prices drop are starting to become very attractive to me.

I agree with you James. I also think we are about 50-55 percent of the way through this bear cycle. I would add that Manhattan market, when compared to the rest of teh country, is last in first out of most downturns. I dont think this will be different. It just means price adjustment comes will have to come quicker.

IL - No I dont think so. Commercial has declined more I would think. We really need more transparency on this.

Residential is in similar mode, before the adjustment. People choose to rent rather than buy and get locked in to 1 year or 2 year leases. I think residential rentals are softening, but landlords/mgmts are still asking for increases. Question is how they flex, and if they negotiate. Im in midst of trying as my mgmt asked for 10% increase, I offered 3%. Waiting.

Its not at point where demand and non-renewals are down as a result of this. I think that will come over 2009-2010...as this crisis 'hits home', so to speak. We're still in the eye of the storm here.

So I think dynamics need to setup for this decline first, and we are in that stage.

hey bears remember this...buyer empowerment perception will change on a dime. As soon as buyers feel the market is bottoming than the herd will be stampeding to get that "deal." Can you imagine the amount of pent up buyers waiting for over a year to purchase. Also, are we forgetting that there is no reason for most of Manhattan homeowners to sell...because they don't have to. They don't have subprime loans and most have stable jobs. I'll bet that most co-op boards reject those risky bonus driven income/financial applicants, that's why most move to Garden City, LI(above). Well, I know we're all hoping for the best....right?

I think folks are seriously underestimating the negative wealth effect at play here in NYC.

I am (fortunately) 80%+ cash (was 70+% cash going into the credit crisis) and sold off a number of positions plus watched many decline dramatically in value. Still, my net worth is off less than 10% (so far) from the peak. As I've always been more conservative than most people, I suspect that there are plenty of folks whose net worths are down much more significantly from a year ago.

I can tell you, even though I'm down modestly in this environment, I have given up some real $$ gains and am much more wary of making an investment in NYC real estate at elevated prices. Particularly given the economic outlook.

If that's my viewpoint, imagine the attitude of folks who had more tied up in equities or other investments that they thought were "good savings".

Steve - not sure if that was meant to be a dig when you referred to those "bonus driven applicants" who can't buy in NYC beacsue they'll be rejected by co-op, and thus move to GC, but you know the old saying about people who assume.....anyway, we are simply looking for more space, nothing more. We own now, have tiny mortgage and are simply looking for a fair deal.

No dig James...real truth..Garden City, LI is full of Manhattan traders and your basic Wall Street Folk....I'm just trying to use logic and figure it all out as to why Manhattan prices continue to defy the "other" real estate scene.

to: Anon | October 9, 2008 2:11 PM

"I am (fortunately) 80%+ cash (was 70+% cash going into the credit crisis) "

I wanted to get an idea of where you are keeping your cash safe.I'm in a very similar situation but I'm sh*t scared the government will hyper-inflate making my cash worthless or something equally stupid to punish savers..

.. where's Volcker, Ron Paul .. help!

I'm a buyer. Have been looking in certain areas of Manhattan and Brooklyn for about 9 months, prepared to make low ball offers. In the past few weeks, however, my husband and I decided to wait 1-2 years (and maybe longer) to actually purchase. We love our rental apartment on the UWS, pay a LOT less than we would to own right now, and we have plenty of space. Time is on our side.

We believe that the prices will decline much more than 10%. We think it will be about 20-30%, if not more, in a few years. In some areas, like between W. 110 and 125th, it may be as much as 40% from peak. On the other hand, if for some strange reason prices don't decline as much as we expect, they are certainly NOT going to go UP for a long time. So we are in no rush.

At open houses, we see many unrealistic sellers and brokers. We also see many brokers with an inflated listing telling us that the price is very negotiable. I usually wonder if negotiable means willing to take 30% less rather than 10% less. I think it is the latter.

If the markets continue on a downward trend, that should push cash to alternative investment opportunities which have traditionally included real estate (as well as gold, jewelry, commodities). I remember in the earlier days of the run up in real estate prices this decade, a lot was said and written about lack of trust in the stock market following the dotcom crash, and how people had to put there money somewhere. Well, that hasn't fundamentally changed - people still need to put their money somewhere, and people still need to live somewhere. Unless there is a large scale transfer of jobs out of the metro NYC area, I think real estate should still look like an attractive option to enough people that prices won't crater. I realize Wall St. may lay off up to 65K people this year, but in a city of over 8MM, how pronounced will the impact be? Last I checked, the City was still expecting a significant net inflow of heads in the upcoming 5 years. Those people have to live somewhere, and they also have to do something with their cash.

uwsider - anon here.

I'm in good old treasuries. All the way.

Here's my take on what's going on:

We are at the climax of the deleveraging cycle as we speak. It's fast and furious. Primary dealers have seized hedge fund assets and are liquidating positions indiscriminately in an effort to satisfy the margin balances and get their own shops into cash. In real time right now, I would think hedge funds around the world are failing. Massively.

Btw, the rumor du jour is that Morgan Stanley is on the ropes. Alas, I'll have to say an "al het" for that one in an hour.

Anyone who used leverage and is net long is done. Game over.

I'm losing $$ on equities now in a big way, but when this unwind finishes up and we are in dry heaves, there will be cash on the sidelines.

This unwinding was absolutely necessary. Truth is, it should've happened sooner but our Fed and Treasury prolonged the pain.

As for where to keep your cash, I think you're fine in treasuries. I don't think we're going to see too much cash chasing too few goods for quite some time.

OTC,

There certainly is no argument that people have to live somewhere, BUT they can only buy what they can afford.

Using the metric of 3-4x income or rents must be close to mortgage (using 30 yr fixed).. how much more will prices have to decline before people see RE as a best use of their cash?

Remember, the cheap easy loans are gone.. people can only buy what they can afford

ummmm, somebody murdered wall street

I have been considering buying a 'classic 6' on the UWS. I regularly go to open houses on RSD and WEA on my own initiative - as to not waste the time of my buyer's broker. The price chops(in listing prices)on the UWS ARE already happening. Check it out on www.natefind.com. Some as deep as -15%. Even with these price chops, properties are simply not moving. I agree with the sentiment that several of you have expressed: I am in no hurry at all. Incidentally, my buyer's broker, one of the top people at Douglas Elliman, SOLD her own apartment during 1Q 2008 and is now RENTING. She's also getting out of the real estate brokerage business altogether. That's not buyers sentiment, that's broker's sentiment ! I don't think I needed a stronger signal than THAT.

uwsider, I totally agree. You are right on. In the end, prices revert to a long term affordability index (3-4x annual household income), or to a reasonable cost premium of ownership/rental. Not TWICE this ratio. Where does that take us, the price levels of the mid 1990s?

Has the mortgage contingency become the norm again, yet. With some banks folding and others backing out of commitments are any buyers risking their deposits by not getting a contingency?

It seems that everyone is ignoring the interest rate issue. I don't presume to know where the real estate market is going to be in 5 years...

I tend to believe the real estate market will fall in NYC area. However, I also believe with a 20% price drop -- this will likely be due in large part to interest rates coming back up to levels that are not artificially depressed.

Assuming you are the average buyer who puts down 20% on a 500K property borrowing at 6% ur looking at a $2400 monthly. If rates go up to where they should be (probably around 9%)and the price of that property drops 20% to $400k -- if u put down the same $100k -- your monthly cost will remain the same..... I wonder why nobody has brought this up...

Ultimately I think the sellers, brokers, tax coffers get hit the worst, with buyers getting only a slight benefit for waiting it out.

In fact, I think if u can get the right apartment at the right price (assuming u plan to live there for a long time) -- you're in good shape.

anon - its a good point. I discussed here often for a few months my feelings about the 'end game' and the long end of the curve. I think the long end will see much higher yields in the years to come and that will be the 4th or 5th leg of the housing downturn after the damage is done from equities as that market follows the credit markets.

Shorting the long end of the curve has been a key trade Ive been watching for past few months

Most of us love this city and therefore are biased in our analysis. If you were to do a truly dispassionate analysis you would conclude that things almost could not be worse for the outlook (factors too numerous to detail). Incomes will drop sharply and the ratio of price/income will drop sharply on top of that.

The irony of the situation (and of most bear markets, in my experience) is that those who have played it safe will get sucked in and lose significant amounts of capital as well. The first 20% drop will be met buy a wave of "bargain hunters." The market will begin to feel like it has stabilized and then we will see the true inventory build (why list your apartment for sale when there is no volume?).

All in all, my best guess would be a 40-50% drop with new construction taking the biggest hit.

mb, I could not agree more. Since there is no foreign buyer price support in this asset class, I think a 50% drop in the value of coop apartments over the next 12-18 months is entirely realistic.

This is one of the best posts I have ever read on the dynamics of pricing and the "sales" strategies that the brokers/agents employ. We saw all these things in Tucson Arizona just after everyone knew the top of the market had occurred, a lot of "hope" especially in the early stages sellers knew they were over the market but were also optimistic that "something would happen to make their home sell", well eventually sellers started dropping quickly and a rush of price decreases happened. At that point it was a game of who would get lowest fastest to be able to entice the limited buyer pool to buy. A lot of those overly optimistic sellers ended up not selling at all, or worse selling for 10's of thousands less then they could of had they priced right or even under before the onslaught of reductions started showing up. I would be willing to bet by New Years, NYC will be seeing these rapid and aggressive price drops like we saw in Tucson. If you know your going to be a seller in the next 3 years you may just get it on the market and get the max you can now and get out, otherwise a NYC seller could be in for a battle.

Thanks Michael!!

PS: you guys see the futures? Ugh, its going to be another 2% down opening tomorrow looks like

My wife and I are buyers with good amount of cash and strong financials. We made an offer on a 2br on UES several months ago that was rejected by the seller. Got a call 2 weeks ago, after the seller issued a price cut, asking us if we still were interested in doing the deal at our last offer. We declined. Basically, our thinking is that we aren't desperate to buy now, and we lose nothing by waiting. Certainly prices aren't going up. I feel bad for the seller in this case, because they clearly made a mistake since they are going to end up settling for probably 100k less than we offered. But as a buyer I'm scared about jumping in now, and I know that friends and colleagues of mine are thinking the same thing. Waiting several months will only benefit us.

OT question for Noah and others who discuss their trading strategies on this board. Do you guys trade in your 401(k)s? For example, the deleveraging that is occurring is something that I had been anticipating for quite some time for all the reasons that were obvious to anyone who reads any of Fleckenstein, Ritholz, Roubini, wallstreetexaminer or our own UrbanDigs.

As a result of that the good news for me has been that I basically sold into all rallies over the past years and even cashed out most of my gold at the top and rebought on some of the dips prior to our most market disarray. In non-retirement accounts I am for all intents and purposes 95% cash and cash equivalents.

However, the bad news is that my 401(k)s have been decimated. A lot of these were started when I was really young so were like 100% long (which I admit was foolish even at the time; I should have had some bond exposure even from the perspective of a then young 20-something, but whatever). Unlike my non-retirement account where I knew I would need the money for something like a downpayment (we closed on an apartment in June at least missing the very top of the NYC RE market by a good 8-10 %), notwithstanding my bearish views I thought it was way too clever to tinker with my retirement money, especially given the oodles of evidence that most active investors underperform the market in the long run (big risk of buying high and selling low). So for those accounts the wife and I just let it ride and continue to do so. In retrospect I wish I had followed my instincts beginning a year ago and taken a more risk averse perspective. But the reality is that I figure I have a good 25 more years of working before retirement with my wife having another 30. Plus, at the time I thought that if there were a bona fide crash (and I would say what we are going through now counts whether or not is it is over), my contributions in future years would go towards buying stocks at much lower prices.

So, while I am bummed about those accounts from a results-oriented standpoint, I am trying to be reflective and determine whether or not I should be upset with myself for taking this passive approach with respect to my 401(k) money.

Any thoughts?

Colgin - don't torture yourself. You managed to get out of your other equity positions, which is pretty damn good. And you're still relatively young.

Noah

Looking at the listing numbers on your site it seems listings have increased to 8200 and monthly contract signing dropped to the 400 range. In 2007, roughly 7000 apartments were bought in Manhattan. Wouldn't this suggest almost a 1.5 year inventory currently on the market?

Thanks

Colgin,

I thought about your question some more and changed my mind. Yes, you should be upset with yourself for not selling every last equity position exactly one year ago at the high. Actually, you should be upset for not selling each of your equity holdings at their respective all-time highs. I did. That was negligent on your part.

But listen, you have an opportunity to redeem yourself. You can redeem yourself entirely if you promise to buy back all of your former equity positions at their new cyclical lows. But you have to hit the exact low.

Anon,

Point taken and I kind of deserve the abuse in your second post. However, there is a serious question to the more active traders as to whether they trade their retirement accounts at all as opposed to their taxable ones. I wonder about this as well on other financial boards where people talk about trading as well, are people generally trading all accounts or just the taxable non-retirement ones.

BTW, I did try to time the bottom on Tuesday and buy some SPYs at market close but got stopped out yesterday on my stop loss order. I def got bloodied trying to catch a falling knife with that one.

Colgin - Dont punish yourself; no one picks the tops or bottoms perfectly. It seems you made some very risk averse moves and that is better than many.

Think of all the shills that convinced people the bottom was in so many times, and why its such a great time to buy equities before this fierce selloff.

Now its panic, margin calls, fear, downgrades, and self fulfilling fierce selloff with no end in sight.

Im pissed at myself for not letting my shorts run knowing the situation we are in. But you cant let it affect you. Think of the people who are in their 60s now and lost tons of wealth both in their house value and their portfolios because they had faith in the system. Learn from this experience, and from every experience. This though is a once in a lifetime event and in my opinion, is much more fierce and serious than the dot com bust that I was on the front lines for and suffered big time from. If it wasnt for that experience where I got killed and lost about 70% of my wealh (not trading, profts were put in Schwab account where I bought csco, ibm, ge, dell, etc..) I wouldnt have been so risk averse this time around and saved myself alot of dough.

Live & learn.

I was thinking of buying this year - but decided to put it off for at least a year (maybe more depending on how bad things get). My question is actually more about the financial markets - at this point it seems that these nose dives are no longer based on economic realities and are tied to pure panic - am I wrong? It seems like we are now in full capitulation - run for the hills - mode.

October - no you are right..overly pessimistic is the term they are using...we usually overshoot on upside and overshoot on downside! Clearly, fear is gripping markets now. I legged in and am long here.

New listings more than 4x contracts signed in last thirty days. Same with price cuts. We have entered a new world... Amazing how abruptly things have changed.

In terms of buying in NYC I really thing it depends largely on your situation. If you have large cash holdings (and prepared to use them to purchase real estate) ... i would think you are really far better off waiting and being patient.

But if you are a standard 20% down buyer (who doesn't intend to sell the apt they buy any time soon) -- i really believe that this may be the right time to buy. OF COURSE, not at these asking prices. But given the skittish buyers and soft market you may be able to get a pretty good deal and at interest rates that are ABSURDLY low. the fed's strategy of continually lowering interest rates to encourage lending, imo is definitely not the best strategy out there.

Personally, I'm more afraid of inflation than any housing price drop (and of course the eventual rising interest rates). PS I am not a broker. I do own a couple properties free of a mortgage and am deciding on selling vs continuing to rent them out. Also I have a large position in cash vs equities (sold 80% of my equities in feb). I usually don't time the market...but this time was diff. Any suggestions???

No response to ronyc's comment regarding inventory levels? I've been wondering the same myself. Streeteasy has gotten awfully interesting these days now that it reveals prior listing information.

The 30 day number of contracts signed is trending down, according to Streeteasy's 3rd-quarter report the number of contracts broken is increasing, the number of prices cuts is equal to the number of new listings. 400 contracts signed a month (and September, while not usually the high month, is also not usually a low month), with over 8000 in inventory would equal more than a 15-month inventory, and we're one of the few markets that still has a fair amount of building going on.

I've always said that I thought we were overbuilding. Not that there isn't a tremendous demand for homes to own, but the homes that have been built (because of the land bubble, and the subsequent increase in building expenses, including both labor and materials), do not reflect the LONG-term needs of the people of New York. A large number of new rental units will enter the market shortly, household creation rates must be tanking (although nobody seems to report on this), rentals continue to exit the rent stabalization program (through means both fair and foul), and buildings are still being built. 2010 should be interesting in Manhattan.

I'm a seller whose had my 1BR in BPC on the market now since May- so I
just missed the last period of relative activity. My girlfriend and I
moved out in April and now rent in midtown. The decision to sell had
nothing to do with market trends but rather I bought a house upstate
from my father that I wanted to keep in the family, which necessitated
selling the condo. I definitely hadn't planned to be servicing both
mortgages/taxes + rent up to and past the end of the year.

I chose my broker for the exclusive because

1. He has closed more deals in my building than any other that pitched
me
2. He suggested the most agressive asking price (all others were
quite a bit higher)
3. He didn't give me a hard pitch or make any questionable promises,
which garnered my trust.

I think I've been realistic about my asking price since putting it on
the market and and have had the most aggressive price in the building
since the spring. It's not that I've gotten lowball offers- I haven't
gotten *any* offers yet despite visitor's stated intentions, so I have no
barometer for what kind of discount buyers are looking for. I lowered
my price once- early last month, but my broker has been advising not
to lower it again- yet, I presume for the reasons Noah gave earlier,
perhaps also because he owns 2 units in the building and has an
interest in not contributing to downard market pressure.

Since buyers are not in any rush to move given the current crisis-
understandably (I wouldn't be either), what's an effective strategy at
this point? I'm willing to discount, but how much is realistic? If
buyers are looking for a 20% cut or more before the end of the year as
some have indicated it will make more sense for me to rent it, though
I'd rather avoid doing so, mainly because if I end up having to rent
it out the monthly will net negative unless I can refinance from my
15yr (about 70% equity) to an interest only loan. If I needed to go that route, could I
expect to be able to get that kind of refi from my bank (Citimortgage) without trouble and expense?

joenyc,

What is the main reason you can't move into the unit yourself and try to break your lease in midtown?

There might be better rental demand in midtown than BPC if you need to try and sublet.

When does your exclusive expire with your realtor? Try the FSBO route with a 6%-10% less asking price?

I would be confident in saying that there is huge demand to live in Manhattan just not today's asking price. Unfortunately, No one knows what that price is (could be as little as 10% further down or 40% further down.. :( )

Is the apartment uninhabited now? What does it look like? Are there any quick things you could do (painting, floors) that could help? Too little, and too much, stuff in the apartment is not helpful (unless an empty apartment is in pristine condition).

Sometimes mental tricks work, although these haven't been used so often recently in New York (ie, priced at $825k to reflect your obvious desire to spend $60k for a kitchen rehab). If the apartment is short on storage space, kitchen or otherwise, think about it and consider if there are any cheap, easy ways to make it better, often a couple of hundred dollars can lead to impressive storage improvements. Good luck.

ronnyc/brenda - I dont really trust the contract signed data that much because plenty of brokers do not actively update their webad with contract signed, which is how streeteasy crawls and picks up their data.

Its not via 100% internal systems. However, its is useful for general trends and yes it is clear that contracts signed are down and price reductions up and new listings up considerably.

Also, inventory doesnt count what new devs have not issued publicly...But months supply definitely is on rise, I can tell you that, and prob will continue for some time

uwsider, the lease on our midtown rental is up in April. The money we'd save breaking our lease and moving back in would be significant but not so much that it would be worth all the hassle (one move in a year is enough stress for us :-p ), not to mention that both of our daily commutes would be more of a pain. If the situation hasn't changed in our favor by April though, that may be our only option.

Actually- I had been selling it FSBO all summer but no offers; I only gave the exclusive last month.

brenda, at my broker's advice last month I had made some of the "good" renovations (greatest effect at a minimal expense). The apartment is clean and presentable, but on the downside it is completely empty as you mention.

joenyc - you can stage it for like 300-400 a month if you feel that strongly about; I usually offer to split that cost with my client, and cover it all if they listen to me and adjust the price accordingly to where it should be.

Sometimes you get lower offers because the buyer assumes its just an expense for you, rather than if you were living there, recently mved out or had tenant moved out

by the way Noah, if I didn't already have a broker I love and trust, you'd get my call when I was ready. I always am so down on this market (and yes I am) but I love the concept of home ownership and I hope to reenter sooner rather than later. I do think that the whole you should not time the market/just leave your money in your 401K and ignore it meme is both naive and insulting to people who can think.

Obviously you need a place to live and you don't need to make a lot of money on that investment in the short term. Obviously, also, you don't need to have that investment tank because some silly twits decided to fuck with your markets irrevocably. We don't need to follow the herds people, we NEED to think just a bit.

Great post. I am a happy nyc renter (with all the savings that that entails and who owns significant property elsewhere)... though that could change if prices fall 30%+, and it becomes more economic to buy. I see NYC real estate (at least in the 1-3m range) as one of the last big "crowded hedge fund trades." Good luck when that dam breaks.

I think that we are entering a brave new world. In recent years, the key for agents was winning the seller's beauty contest (no matter the "campaign promise"). But what happens when inventory skyrockets and the buying pool thins? I would think that agents have a strong incentive to only take on listings where the seller has reasonable expectations and a strong desire/need to sell. Old habits die hard... but... other markets show clear path of where we are heading. Look out below.

I'm also happily renting after having sold my apt. in 2006.

As an observer of the NY economic landscape, I would think it best to wait in the sidelines for the following 2-3 years. The current financial crisis is the most severe I have seen and its full effects are yet to be fully understood or discounted. The large scale distruction of wealth, the financial industry, employment & tax revenues should not be underestimated. The USD is also rapidly appreciating across the board so one has to wonder about the foreign purchase factor & tourism plus they have their own serious economic issues.

If memory serves me correctly, Manhattan RE experienced the most aggressive bull market in its history from the lows of 1995 to the peak in 2006-7. Unless someone knows differently, every factor that propelled the unprecedented bull run has fully reversed and then some.

Time will reveal all but I doubt the RE correction will be anything that resembles shallow or short lived in its duration.

I think another reason fees are not being paid and free months not offered is that prices have come down. Apartments are moving but part of the reason is that prices came down to a point at which they will move.