New York City real estate buyers may have, after a good long run, lost their upper hand, according to a residential market report released by The Real Deal last week. Since the start of the national economic meltdown, residential real estate buyers in New York became stronger, as evidenced by every indicator available in the profession. Time on market increased drastically for all types of properties, from new construction to luxury conversions. Average listing discount rose four-fold, forcing sellers to offer signing incentives ranging from a month’s free rent to free trips to Italy. The number of average bids dropped, prompting many sellers to either sell well below asking price or stepping out of the market altogether. Combine this with a tighter mortgage market, in which many potential bidders were disqualified even before they could put in a respectable offer, and it’s no wonder sellers started feeling like the floor has been pulled out from under them, while buyers gained the confidence to underbid by as much as 40 percent and expect to come in well below asking price with little competition.
That may no longer be the case, at least in New York. A halt in new construction projects, complemented by a buying boom spurred on by the first-time home-buyer credit, which was extended last month to April, have dwindled the city’s supply of available stock. Stock market stabilization, respectable economic figures indicating a healthy recovery (despite the horrifying unemployment rate), and the lowest interest rates in most people’s memories have brought out buyers out of the woodwork, and they’re now competing against each other for the first time in a year and a half.
Brokers interviewed for the Real Deal report say that the stabilization in real estate prices has brought out buyers who so far have been sitting on the sidelines, which has raised competition for appropriately priced apartments.
Sellers, as a result, no longer have to negotiate with added incentives, and offers above asking price are coming back.
Furthermore, according to brokers at Prudential Douglas Elliman and Wohlfarth & Associates, buyers are complaining about a lack of inventory, although that is probably due in part to a slow-down in new construction over the last 18 months.
Here at Elika Associates, buyers are now vigorously competing against each other, and are asking for more options. Price cuts in new developments, accompanied by the drying-up of supply, have brought a balance to the market, according to Corcoran Sunshine Marketing Group. Furthermore, a weaker dollar is attracting more foreign investors.
Overpriced properties, however, remain just as hard to sell as they were in the months following the Lehman Brothers collapse. Whether this new balance and healthy competition move into 2010 remains to be seen, however: with Wall Street projected to dole out bonuses in stock rather than cash, a key ingredient for this season’s buyer push will go missing, and a buyer’s market may come back with a vengeance.