I just returned late last night from a 3 day family skiing weekend to Mt. Snow, Vermont. As a proud father, I must share that my 6 1/2 year old son skied from the Grand Summit having only been on skis 4 times before and my 3 1/2 year old daughter made her inaugural appearance on skis and is already tearing up the slopes. It was a much needed respite from all of the negative stock market and housing market news that is jamming my In-box.
So back to reality. I am now convinced that we are officially in a recession and as most economists will tell you, the federal government won’t let us know until sometime next year when we have hopefully begun to recover. That said, the Manhattan real estate market continues to remain active with the number of visitors to open houses picking up as well as the willingness of buyers to bid. I and my colleagues are also seeing an increase in phone calls from prospective sellers who are considering a sale in the very near future. Perhaps this is in part due to seller anxiety, an influx of bonus money (see Jonathan Miller’s Matrix: Only Bonus Babies Really Know The Fine Print) to the marketplace and/or falling mortgage rates. Regardless of the reasons, transactions continue here in the Big Apple.
Now back to my weekend jaunt to Vermont. Every time I lay foot outside of Manhattan, I witness evidence of all of the negative housing news that I’m bombarded with on a daily basis. As we drove around parts of Vermont this weekend, for sale signs were plentiful and stories were swirling about failed developments and drastic price drops in a market that seems to be sliding further before it will rebound. It’s hard not to let this type of negative news have some effect on my local market sentiment but every time I think that we may be headed for a slow down or even decline, I have been surprised by Manhattan’s resiliency. That said, we are not immune to a drop in home values!
Here’s how I see our local market conditions today:
Positive (my observations and not necessarily my beliefs):
- Interest rates are incredibly low and may go lower!
- Inventory remains at historical lows.
- People still want to live in Manhattan.
- Rentals remain incredibly expensive.
- Wall Street bonus season is still providing an influx of cash to the real estate market.
- With the stock market in disarray, many see Manhattan housing as a safer place for their money.
- The dollar remains weak which continues to attract foreign buyers who feel like they are buying a piece of Manhattan for 50% off.
- The Manhattan housing market is being buoyed by a plethora of industries unrelated to Wall Street.
- We are likely in a recession.
- Buyer anxiety remains high as buyers don’t want to feel like they are overpaying in a declining market (no one wants to catch the falling knife).
- Wall Street bonuses are being paid in large portions of restricted stock (people generally don’t buy homes with stock)
- It’s difficult to make sense of the dichotomy in the market place.
- Buyer and seller psychology haven’t yet "met." (They’re getting closer)
- We can’t ignore the suburban markets outside of Manhattan that are fueled largely by the same buying pool (Greenwich, Westchester, parts of NJ)
That’s my perspective of how today’s market looks. Again, deals are being done at a slower pace than last winter, but buyers seem to remain eager to own their piece of Manhattan.
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