The recent credit and stock market meltdown, and more importantly, the bursting of the leveraged buyout bubble and collapsing hedge funds will significantly reduce the bonus pool this year.
Additionally, the weak Dollar is already strengthening due to unwinding carry trades resulting from risk aversion by fund managers. A strong Dollar is not good for foreign real estate buyers.
Condos have held up longer than coops because most foreigners don't purchase coops due to board regulations. So foreigners have been purchasing and selling these condos to each other, driving prices up.
However, with the strong Dollar, these foreigners will see their currency driven discounts diminish.
In other words, the Manhattan real estate market, which has been strong while the rest of the nation suffered, is about to get its first real dose of reality- with more to follow.
The nationwide real estate bust has impacted Wall Street, with ripple effect from the subprime fallout still working its way through the system. Wall Street has finally been affected, and the next to follow will be the economy's indicators. If one looks at the data, one will quickly realize that we have not reached the peak in terms of sub-prime and ARM resets- that is due later, and the current rate will increase until that point. In other words, the worst is not over, and if Wall Street dropping over 500 points in a week is any indication of what's to come, it would be prudent to wait and see what the effect Wall Street falling will do the this local market.
Assuming you don't have a realtionship with an agent already, you might want to call and schedule appointments with several area real estate agents. You can, at that time, ask them about the market and get their thoughts, as well as get a feel for which one will represent your interests the best.
Good luck with your home purchase!
We will probabl
For the rest of Us, it's a little like laser surgery. Beware the optimists, beware Technology, walk the streets, walk the apartments, watch what sells and closes, and know the why. Work with a GREAT Agent (like myself) and Take your Time! No rushing!
Licensed Real Estate Salesperson
Many of us work on bonus' and commissions. Wall Streeters make most of their income on their yearly bonus. What do they do with their cash? Keep it in the market... what do they live on? CREDIT. Whether it's credit cards, or home equity lines of credit.
How many of them have second homes? So, now that their investments aren't worth what they were, their mortgages are adjusting, the taxes are due in two months, etc, etc. The money to pay all of this just isn't there... and it won't pick up in time to avert the crisis.
You know, it's easy to predict doom and gloom for the future. I really don't know how long this will last, but the last time this happened, in the late eighties, the height of the real estate market occured in 1991. It took about five years for the market to pick up again. And what's the real sign of the market picking up? It's when the bottom feeders start to buy.
So, the sellers who have to sell, will. The sellers who don't have to sell, won't. Selling prices (per square foot) will decrease steadily. Sales of apartments will decrease also. Lots of new inventory will come on the market for rent, as properties that haven't sold will be offered for rent. Rents will come down also.
But the biggest problem will be the "wait and see" attitude. Everything will be in a holding pattern for awhile. The only thing that will junpstart the real estate market in New York and elsewhere, will be the sense that we've hit the bottom of the pricing, and credit (mortgages) freeing up.
I think we're in for a long wait, perhaps a couple of years. There will be a lot of attrition in amongst the real estate brokerage community. Or at least a lot of brokers having to supplement their income somehow.
Pessimistic? No. Reality Check? Yes. But there's a light at the end of the tunnel, and this is just a normal occurance that has taken an abnormal amount of time to occur.
NYC is a different animal from the rest of the country and needs to be viewed as such. The bad news is that no matter where you go proximal to NYC - its expensive will remain so.