As the New York City real estate market has fallen back to earth, the central question now is how much further it will go. There are some anecdotal signs that the free-fall the market has experienced during the past several months is now over. To some analysts at major New York real estate firms, it appears the decline continues, but at a slower pace. At least some sense of normalcy, maybe, has returned.
Of course, large companies that have billions of dollars sunk in the real estate market will always manage to produce experts who can find anecdotes and preliminary evidence to support claims that the market is coming back.
Something, however, has given the latest round of mildly optimistic news articles more credibility than usual: They have coincided with the seeming return to normalcy in the national labor market, the single most important market for the nation’s economy.
Again, like the stories of the New York City real estate market, no one is claiming an end to the decline. In fact, by any normal standard, last month’s jobs report, that the nation lost well over 300,000 jobs, was a horrible report. Keep in mind, for instance, that the economy needs to produce a bit over 100,000 new jobs each month just to keep pace with population growth and changing demographics. However, a loss of 360,000 or so jobs is at least a report that can occur in normal economic times.
When the economy is shedding 500,000+ jobs a month, it means that the economy is shedding jobs as fast as it structurally can: If employers could abdicate contracts faster, they would. So, there’s no telling where or when the damage will stop.
With numbers like last month, economists can begin to get a grapple on things, and normal economic factors can again affect consumers who no longer resemble unresponsive, scared-stiff deer stuck in the headlights.
One of those factors has been the change in the US dollar that has resulted from a reduction in the general sense of panic in the economy. A couple of months ago, it was as high as $1.28 per euro. Since then, it has lost just under ten percent of its value vis-à-vis Europe’s main currency.
While that sounds bad, it is good news for the economy as a whole and especially the New York apartment market. It makes the market much more attractive to the European buyers that were so important to market demand in 2007 and much of 2008.
No one is saying the decline is over, but with a return to some degree of normalcy, positive developments like a decline in the US dollar can begin to again exert influence on the New York apartment market.