As the market has been transitioning from a reliable seller’s market to a strong buyer’s market, the sales dynamics have been changing in some different ways. The changes go far beyond just longer or shorter wait times, or more or less bargaining power. Instead, the shifts in the market have rippled through the buying and selling process with effects that many players in the market have not or would not expect.
Perhaps the single most significant change in the New York City housing market has not been in real estate itself, but the financial industry. The global credit crunch – perhaps more accurately written, “The Global Credit Crunch,” by this point – has restricted the availability of loans to even prestigious, well-established and accomplished buyers.
As the New York City real estate market is no longer one single booming outlet of value growth, the differences in neighborhoods and quarters get even more critical. Whereas two years ago, it was safe to assume that nearly any normal part of the city would be a good investment, now some neighborhoods will yield huge profits while others will stay stagnant or even decline over the next several years.
The tighter market also localizes the effects of inventory numbers. While inventory may be way up overall, that increase is heavily concentrated both in certain neighborhoods and, citywide, in certain types of apartments.
Another major effect of the changing market conditions is the growing importance of negotiation tactics. Sellers are currently growing fearful of having to sell their apartments in the 2009 market. Careful use of negotiation tactics can exploit that weakness in a way that will garner you tens of thousands of dollars.
At the same time, even sellers in the current market are not willing to be bullied. Just as negotiations can reap a harvest of huge savings, over-playing your hand can lead to nothing but a whole lot of wasted time on everyone’s part.
If possible, try to casually find out how many offers the owners have received before talking to them in great detail. If a home has gotten several serious offers in the past month, it’s doubtful that the owner currently feels like he or she needs to sell immediately.
In general, the market right now is particularly ripe for purchases in lower value neighborhoods. These areas have already experienced the bulk of the price declines, and many previously have hidden in them some genuinely incredible deals.
For the luxury market, this means giving at least a quick glance to properties outside of the Manhattan market. While Manhattan offers many hidden deals, it has yet to feel much of the effect of the declining value of the market.
In the end though, as the market tightens, it is most important to think of the market not as the New York City real estate market as a whole, but instead the market of the specific type and location of your ideal apartment.