As far as who is more realistic in terms of their expectations in today’s Manhattan real estate market, the scale has definitely tipped toward sellers. Before you get all crazy on me, here me out. I’m not AT ALL suggesting that it is a seller’s market…because it’s not. That said, it also is NOT the buyer’s market that many believe it to be.
With prices down between 10 and 40% from peak levels across the city, buyers are again sweeping in to snatch up what appear to be bargains relative to the recent housing boom. But navigating today’s real estate market has become incredibly confusing for buyer’s and their agents as media reports trumpet that "now may be the time to buy." That may indeed be the case for some but the major obstacle that I’m observing today is the misinformed buyer.
Most sellers and their agents have already adjusted asking prices to reflect recent depreciation. Of course some are still delusional but it seems to me that asking prices are down almost the same 10-40% from peak levels. Buyers bidding another 20% below these already adjusted prices are experiencing overwhelming frustration at the inability to negotiate with sellers. Few are successful and most can’t understand why their ultra low offers aren’t being at least countered.
It has never been more important than it is today to analyze an apartment’s price and how it compares to peak pricing levels as well as recent sales and contract signings. If a property is priced properly based on recent market depreciation, an ultra low bid is likely to be met with silence from the other end.
The recent increase in sales volume is largely in part to more reasonable sellers finding sophisticated buyers who recognize a property’s value relative to the recent boom. Although I personally think we are likely to see another 5-10% decline in prices before stabilization and sideways movement for a few years after that, a psychological bottom is being explored. Anecdotal evidence is showing that aggressively well priced properties are receiving multiple bids which may indicate that we are nearing the "bottom." Just last week a buyer of mine had an offer accepted only to be gazumped by another bidder a day later. That property had languished on the market for 6 months. Once the price reached what buyer’s perceived as "bargain level" (20% below the original ask and 35% below peak pricing) the sellers received 3 bids in 2 days.
So despite the fact that we have witnessed one of the most rapid price declines in housing market history, buyers must take into consideration that many sellers have finally accepted this fact and adjusted prices accordingly. That said, buyers need to do their homework and bid appropriately if they want to own a piece of the Big Apple.