With stocks crashing, then posting their largest rally since the early days of the Great Depression, then crashing again, it’s clear New York City’s housing market is going to feel at least some of the turmoil.
The market was already retreating from a buyer-seller détente into a full-blown buyer’s market before the calamities that followed Lehman Brother’s collapse. As the stock market has dived and news from the national economy has been truly horrible, though, buyers have become more aggressive.
There are reports of buyers making half a dozen low-ball offers to try to capitalize on nervous sellers who are now perhaps regretting spending the summer over-confidently rejecting offers of a more reasonable nature.
That type of strategy, of course, is common in all real estate markets that are in transition. The more dramatic sign of the turmoil facing the New York City real estate market right now, however, is the terms being offered to brokers.
Some property managers have upped the typical commissions being paid to real estate brokers who make sales happen.
The New York Times reported on perhaps the most striking example of this new trend: Prudential Douglas Elliman is recommending its sellers increase commissions for buyer’s brokers from 3 to 5 percent.
While not all sellers are following this path, indeed the actions of one of New York’s most prestigious real estate companies is a sign of the times.
With many buyers waiting on the sidelines, waiting for the turmoil in the financial markets to settle itself, some deals abound. Right now seems to be the time when sellers are transitioning from added perks – free storage, free parking or the such – to significant cuts in the actual asking price.
That being said, many landlords are still unwilling to reduce prices directly, but instead have opted for backdoor discounts like reduced transfer taxes, delays in fees and other such de facto cost-reduction measures.
Many owners in Manhattan are only now just starting to seriously re-evaluate their pricing schemes. Many landlords in Queens and Brooklyn, however, are beginning to feel a certain sense of desperation to sell their new condo developments and older apartment units.
Builders at the early stages of large projects are becoming especially worried about the prospects of following through with their plans. Demand is still active for the newest apartment buildings and condos, but investors have become increasingly wary of risking money on a market on which few can offer many meaningfully confident medium-term predictions.