Latest posts by Tyler Banfield (see all)
- Questions to Ask Before Hiring a Buyers Agent in NYC - March 15, 2018
- A Checklist for New Renovations in NYC - January 4, 2018
- 3 Things Tourists Do That Drive New Yorkers Crazy - December 28, 2017
Over the past decade, the luxury apartment market in New York City has been one of the most bull markets in the country. Even as the subprime mortgage crisis enveloped the rest of the country, New York City real estate continued to climb in value. In the previous quarter, for instance, New York City saw the largest increase in property values in the country. During that time, growth in the value of luxury apartments tended to outpace the rest of the city’s market.
Years of this lopsidedness led to a market that tilted strongly in favor of brokers and sellers. During the first half of 2007, if a buyer was to submit an offer below the asking price, they would likely not even be taken seriously by the owners. However, as worries about the health of the economy as a whole, and the financial industry specifically, began to build this summer, the luxury apartment market began to finally return to something resembling normalcy and equilibrium.
Over the past month, there has been much speculation about what the size of annual holiday bonuses for leaders in the financial industry
would be. Executives and managers in the financial industry make up
such a large segment of luxury apartment buyers in New York City that the size of average bonuses in the industry are a critical variable
in determining the direction of the market.
On the one hand, profits in the financial industry will be considerably
lower this year than last. But on the other, bonuses have been on a
strong upward trend for the past several years, irrespective of industry profits. So, it was not clear which direction bonuses will move in.
In the past week, however, major New York City-based financial companies have signaled that bonuses will once again be exceptionally strong. Articles noting this have begun appearing in Forbes and other major publications. This publicity may very well push the luxury apartment market in the city to again start increasing its value.
There is still a possibility that the country will briefly head into
a shallow recession in the middle of 2008. However, the most recent
jobs reports, while weak, seems to have created a consensus that, while growth will be low next year, it is unlikely the economy will actually shrink at any point in 2008.
So, short of unforeseen events in the macroeconomy, it is likely that
New York City’s luxury apartment market will begin significantly increasing in value after the turn of the year. While it is too early to say that economists and market analysts have reached this consensus, buyers looking to be ahead of the curve should likely close on the apartment of their choice in the coming weeks, not months.