Tomorrow’s NYT Real estate section reports that first time buyers, encouraged by low mortgage rates and huge price drops, are returning to the NYC market.
Many of these buyers have never received a fat bonus check, so they don’t miss it now. They did not suffer huge stock market losses, because they didn’t have huge stock market investments. They aren’t mourning the loss of value in their existing co-ops or condos, because they have never owned one.
They have jobs and good credit ratings, and they are looking to buy.
And now, brokers say, these mostly first-time homeowners are taking advantage of reduced apartment prices and interest rates that have fallen to the lowest levels in a generation. They’re making deals — sometimes far below asking price — on apartments marketed for under $1 million, and especially under $500,000. Still, the hard number of transactions remains depressed; in the fourth quarter of 2008, they were more than 30 percent below levels of a year earlier, according to a market report by the Corcoran Group.
At three tenement buildings on West 107th Street last weekend, buyers shuffled past one another as they climbed the narrow staircases, often up to the fifth floor, to look at newly renovated two-bedroom apartments in otherwise unrenovated buildings.
The buyers, some of whom said they had been priced out of the market in the boom years, were drawn back by low prices and the promise of deals.
“It is price, price, price,” said Jason Haber, a broker at Prudential Douglas Elliman.
The same phenomenon is just starting to appear in Greenwich, and I’m glad. Look: as a real estate agent, I welcome the beginning of the return of reality because prices were crazy and getting crazier each day, narrowing the pool of buyers into an ever-thinner slice of the population. Had it continued, this price spiral would have resulted in just two buyers being able to afford Greenwich houses, Warren Buffet and Bill Gates, and Mr. Buffet doesn’t seem to share the taste of most Greenwich spec builders. Something had to give.
My pal Nancy Fountain was always amused by my fascination with hurricanes, accusing me, accurately, of taking a perverse pleasure in tracking the chaos and disruption huge storms brought to land. I love blizzards, too, so I might as well admit that watching the fall of our local market is kind of cool.
But my extended family owns houses in town to, just like the rest of you, and I know very well the sense of unease watching the value of those assets drop. There was always something comforting in knowing that, if everything hit the fan, a couple of million was available – we might have to move to Bumfruck North Dakota to take advantage of that pile of cash, but it was there. Now it isn’t, or not as much of it is. Owning a house here was sort of like taking an airplane flight: you know there is a possibility that the plane may come down unexpectedly but what are the odds? As Thursday’s U.S. Air flight into the Hudson shows, you never know. The passengers in that one escaped with a couple of broken legs and no other serious injuries. We can only hope we land as successfully.
So things are what they are, and we’ll see how they develop. My advice remains unchanged: if you have to sell today, or within the next year or so, slash your price to the bone and hope you attract one of those buyers looking for a bargain. If you’re buying, insist on a price that will shield you from a further decline in the market. And we’ll all get along and on with our lives, I hope.