I just returned from a visit to the Maryland and Delaware shores and let me tell you that the resort housing markets in these areas are seriously hurting. Signs are posted everywhere suggesting that "now is the time to buy and we will tell you why?" Vacancy rates are high on both the residential and commercial fronts (an entire shopping mall that has been there since I was a child is now vacant), traffic volume was incredibly low for this time of year, and getting a table at a restaurant was a snap. I can’t remember ever seeing these areas so quiet during the 4th of July in all of my years visiting.
So is it indeed the time to buy in places like these? No one wants to catch a falling knife but it appeared from just a glance at advertisements for condos and homes that prices are as much as 30-40% off their peaks and inventory is plentiful. A recent conversation with friends who summer on the Jersey shore have also indicated much of the same in terms of price drops and surges in inventory. I wonder how much farther prices will have to drop in these areas before buyers jump back in sensing bargains. For those trying to "time the market," good luck with that.
And lastly, is this any indication of what is to come for the Manhattan marketplace? I don’t think so…or at least I certainly don’t hope so. That said, a 10-20% adjustment in prices would certainly generate an increase in sales volume and may even provide the opportunity for home ownership for so many who have been priced out of the market. The good news about Manhattan housing cycles is that they generally lag other housing markets across the country and they are usually the first to recover making our down cycle a bit shorter than the rest. That said, I am seeing some price softening in the market as buyers remain cautious and sellers become much more realistic about their expectations. Deal flow (anecdotal of course) has remained steady through the first 2 quarters of 2008 but lags that of same period 2007.
There is no one out there who has a crystal ball to tell us whether Manhattan will see price depreciation like that of so many other markets across the country. That said, those of us who have been doing this for 16 or more years can tell you unequivocally that Manhattan is not immune to a housing slump (late 80’s through early 90’s). It doesn’t however appear to be headed in that direction…yet (I believe prices have dropped in some segments of the city as much as 10-15% already). With rental vacancy rates still very low and co-op, condo and town home inventory still at relatively low levels, the choices for those who wish to call Manhattan "home" aren’t plentiful. It’s buy, rent or stay put and of course it makes it much more difficult for me to earn a living if people choose the latter. Thankfully, New York remains appealing to a plethora of prospective purchasers/investors from across the globe. And let’s not ignore the fact that New Yorkers themselves are absolutely OBSESSED with real estate and where they will next hang their hats and everyone needs a place to "hang their hat."