Brokers split on future of Manhattan home market
Brokers are divided on what recent events on Wall Street — the crash of the financial system, the House defeat of the $700 billion bailout package, and the stock market decline and rebound — could mean for the city’s residential real estate market. Some believe the market could be in for a quiet period until consumers regain confidence. But others take a more optimistic view that the market has already seen the worst effects of The Situation On Wall Street.
“I think that in the sale market, we’re just due for a quiet plateau, probably until after the election,” said Douglas Wagner, president of Benjamin James Real Estate. The Manhattan rental market has already declined over the last year, with unit prices dropping as much as 7 percent from September 2007 to last month, according to the Real Estate Group’s September Manhattan rental market report.
Even if a revised bailout package passes the House of Representatives and improves The Situation On Wall Street, Wagner said, “we [still] have to begin restoring consumer confidence.”
In the meantime, some sellers and landlords remain reluctant to lower prices but are offering incentives to buyers and renters. Sellers are offering to pay closing costs or real estate taxes, while landlords are offering a free month’s rent and rent discounts, Wagner said.
But Jon Varnedoe, an associate broker at Prudential Douglas Elliman, said the residential market, particularly in the $1.5 million to $3 million price range, has been reacting to Wall Street upheaval for a while.
“The turmoil on Wall Street has been something that people on Wall Street have been sensing is going to happen….That segment of the market hasn’t been moving that quickly,” Varnedoe said. “The real estate market has been experiencing this turmoil because the people that felt [it] was going to happen were people who felt they couldn’t buy.” Varnedoe said he expects the market will likely pick up before other sectors of the economy.
Because of current market conditions, the speculative market that boomed in the city over the past few years will probably decline, said Leonard Steinberg, executive vice president of Prudential Douglas.
But regardless of the market upheaval, said broker Barbara Fox, president of the Fox Residential Group, “there are always people that want to buy and sell in New York.”
“The base of the market, which is the market you rely on…are people buying real estate because they need a bigger home, a smaller home,” are getting divorced or married, or are having children, Steinberg said. “People still die, they still get married, they still get divorced, they still have babies.”