158 year old Lehman Brothers has declared bankruptcy. Merrill Lynch has been scooped up in the nick of time by Bank of America. AIG is also talking bankruptcy. And who can forget Bear Sterns? All of the fallout from Greenspan’s "easy money" mortgage days is finally going to have an effect on the Manhattan real estate market. But I’m choosing not to panic for a multitude of reasons:
- Inventory MAY increase: My friends and family (and I have a lot of them) on Wall Street won’t likely be moving anytime soon as they hunker down for the remainder of this storm. That said, some of the unfortunate unemployed will likely sell which could cause a much needed bump in inventory.
- Buying pool continues to thin: There is no doubt in my mind that with local layoffs at Lehman alone projected at over 10,000, there will be fewer buyers to snap up properties in all price points. That said, note that the duplex penthouse at The Stanhope sold this weekend for $47.5M (via Curbed). For qualified buyers, there will be some great opportunities (I’m not talking huge discounts here).
- Market psychology more shaky: Even those who aren’t directly effected by the fire sale on Wall Street are going to be more nervous about jumping into the market. I think this will mean that trustworthy real estate professionals are going to be more sought after than ever before.
- Prices may soften further: Depending on geographical location and apartment size, we will likely see additional price softening again, providing more buying opportunities.
So for those of you who earn your living selling residential real estate in Manhattan, take a deep breath and understand that opportunities are going to present themselves over the next 6-12 months and believe it or not, Manhattan will continue to be a sought after place to live by people from all over the country and the world. But it’s going to be a wild ride!
ATTENTION SELLERS: Do you want to be ahead of the curve or behind it? It’s your call. If you are considering a price adjustment, now is the time and be aggressive. There are plenty of cash rich buyers on the sidelines just waiting for buying opportunities, but they want perceived value.