With the volume of deals decreasing at a significant pace, a new set of questions are being asked about the Manhattan real estate market. Most of them have to do with the general point of curiosity that has got everyone’s mind in a fix: Will the slowdown in the national housing market reaches its way into Manhattan, which has been something of a fortress of good news for the real estate market over the past several years.

The major Manhattan real estate firm, Brown, Harris, and Stevens report that the number of new contracts during the first quarter has decreased by 21% from the same quarter in 2007.

While the volume of demand is down sharply in most places, it has shown particular strength in the luxury market, which continues to benefit from high foreign demand resulting from the weak dollar. On Friday, the Dow Jones Industrial Average fell over 300 points as oil saw its largest one-day increase in history, and unemployment numbers saw their largest uptick in over a decade. This will surely lead to further weakness in the dollar, which in turn will continue to benefit the New York luxury real estate market.

One major variable that remains to be seen is if Wall Street financial firms will continue to cut their employment levels significantly. Over 7,000 analysts at Bear Stearns lost their jobs during the takeover by JP Morgan. Lehman Brothers have also played off a large number of workers. Similarly, Citigroup has announced a major set of layoffs to take place over the coming months.

Furthermore, bonuses are expected to be significantly smaller this year, at least for the bulk of the analysts and other mid-to-high range employees that make up a large swath of potential demand for luxury apartments in the New York real estate market.

That being said, it seems that the worst of the subprime crisis is over, at least for Wall Street banks and financial institutions. Further bad news for these firms is not assured, and this has left the market with a great deal of uncertainty.

Exploiting this uncertainty may be a good move for buyers and renters, who have greater leverage to negotiate now than at any time in the past decade or so. Landlords and coop boards are beginning to feel ill at ease about the long-term fate of the market, and thus are far more willing to compromise than they were even just six months ago.

As the importance of negotiation increases, using a buyer’s broker becomes even more important.

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