The spring residential real estate market is in full swing albeit quieter than the same time last year. In addition to less volume, there is one major impediment to deals getting done in today’s marketplace. That obstacle is price. Although most sellers have accepted that the market has declined between 20 and 40% from peak levels (depending on the neighborhood), buyers are seeking greater discounts in an effort to hedge the possibility of further price depreciation. The result of this gap in psychology is preventing price discovery in the market.
Anecdotaly I have seen at least 3 transactions in the recent weeks where buyers and sellers were separated by as little as 2-4% of the asking price with neither side willing to budge. And so far, both sides are holding their ground even unwilling to split the difference. In an effort to make a deal, buyers are asking sellers for items like stereo systems, flat screen TVs and furniture to be included in the sale. Some sellers are agreeing to such concessions while others stand firm patiently waiting for a better deal to come along.
So while some deals are being made and others remain in a stalemate, we seem to be at least nearing price discovery. Until that time, let the marathon negotiations continue. Never a dull moment in Manhattan residential real estate.