A Tale of Two Psyches appears to be an appropriate title for the current Manhattan real estate market as languishing properties coexist with bidding wars. Activity in the past 10 days has picked up for me and my colleagues exponentially from late November and December. This past weekend, on behalf of our clients, we bid on $4.2M worth of residential real estate ranging from a 1BR co-op asking $779k to a Classic 7 room co-op asking $2.45M. The $779K property is selling "considerably above $800K" per the seller’s agent and the $2.45M has multiple offers at the ask and will likely go to a highest, best and final bid over the asking price. Both were well priced (duh…obviously) but not so well priced that one would expect this type of multiple bid scenario. Another colleague of mine just informed me that his buyer (with liquid assets in the high 7 figures) just lost a bidding war on the Upper East Side by $100K and he bid $51K over the $1.7M asking price (so it’s selling for $1.851M or almost 10% over the asking price).
So what’s going on? Inventory remains unbelievably low and SOME buyers are snapping up SOME of the quality inventory that hits the market. The unusual aspect of the current real estate marketplace that I’m observing is that the anxiety surrounding the future of our overall economy is effecting Wall Streeters much more significantly than other professional sectors such as doctors, attorneys, entrepreneurs/business owners, retired empty-nesters, and those who just refuse to pay a landlord. Many Wall Streeters, fearing a recession and therefore expecting a buying opportunity have either put their search on hold or consistently underbid prices at levels unacceptable to sellers. Another interesting piece of the current dichotomy is that some attractively priced and well located properties continue to languish on the market with numerous "interested" parties neglecting to bid. It’s a very bizarre (and challenging) environment that I don’t ever remember seeing in my 16 years in the industry.
These happenings over the past couple of weeks could indeed be anecdotal but I think it’s worth paying attention to the number of buyers who are still sitting on the sidelines with cash just waiting to pounce on their home as evidenced by the numerous bidding wars taking place. 2008 is already shaping up to be a wild ride indeed!