In one sense, little has changed in the Manhattan Real Estate market since the last quarter. Prices are still heavily depressed from their peaks, down as much as 30% in some areas. Inventory levels are still high and show few signs of abating. Offers are being made, but they often come in the form of lowball, aggressive buying tactics by buyers looking to capitalize on current uncertainty undermining sellers’ confidence.
If we shift our focus away from the economic fundamentals and look instead at the current psychology of the New York apartment market, though, the picture today is very different from the mentality that has pervaded the market for some time.
Uncertainty is still a huge factor, of course, with many buyers continuing to sit on the sidelines and wait for even better deals to emerge. Especially after last week’s jobs numbers, however, there is little sense that the market is in the free-fall that has characterized recent months.
Whether or not we are still in decline is a different question than the more practical matter of whether or not we are close to the bottom. Some neighborhoods may still see significant downward adjustments in their price structure. For the most part, however, it is clear that, as the labor market appears to be returning to normalcy, the New York apartment market, while not ready to start improving, is also returning to normalcy.
Prices may continue to adjust downward for the next several months, but it is clear that they will move at a much slower pace, barring any new, additional major shocks to the national economic system. At any rate, though, it is clear that the market is not too far from its bottom – and that’s the first time that this blog has felt declaring that since the crisis began.
The recent dive in the US dollar has also helped the market and should lead to an uptick in foreign acquisitions over the next few months.
One particularly bright spot of the past couple of weeks has been the super high-end market, where a number of sales have been completed valued at $10 million and up. This may be a sign that the savviest investors in the NYC apartment market feel confident that the end of this quarter and next quarter are the time to implement the classic buy low and sell high market strategy.
There is still a risk, but the risk now is composed of a mild continued decline in prices, not a free-fall that paralyzes markets. The reward may be a double-digit increase in property values over the course of the next five years.