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Why aren’t apartments 50% off yet?

NO ONE has a crystal ball. I always say that if I could predict the future, I would make a lot more money than I could as a real estate broker.

However, I have said repeatedly in many places, and I’m saying it again, I just don’t see prime Manhattan going through a repeat of the late ’80s/early ’90s skid. It would help me, as an owner, upgrade if prices on my dream apartments all tanked . . .but my forecast instead is for a market that flatlines, with prices flat to slightly down and very few transactions  . ..

whether that means prospective buyers want to jump in right now or not is a matter for each of you and your individual real estate agent.

But here’s what’s different:

1) money is cheap even if property isn’t. Interest rates are half of what they were in the late 80s;

2) NYC is a much nicer city. Tribeca used to be the land of giant rats where you’d be afraid you’d be mugged at night. Who’s going to attack you down there now, a laid-off investment banker? A Phil-and-Ted wielding mom?

most importantly, 3) Inventory hasn’t piled up yet. According to data provider Miller Samuel, we currently have seven months of inventory on the market (a “buyer’s market” is usually defined as anything over six). It’s worth noting that days on market are lengthening. Properties are certainly taking longer to sell.

But it would take yearS (that’s plural) of selling almost NO properties before we hit the inventory levels of twenty years ago.

How many years?

Let me put it this way: According to Miller Samuel, 2,654 properties sold last quarter, down from 3,081 the quarter before. So we’re clocking along at around 12,000 sales a year.

If that rate suddenly plummeted to just 500 sales a year — a 96% drop in sales, which is, umm, unlikely . . .and inventory kept coming on at the same rate, it would still take nearly THREE years before we were as screwed as we were in the ’80s!

Now of course you can say that if there’s a panic, inventory would come on at a higher rate — but remember, I’m talking a 96% drop in sales.

So if you’re waiting for the ’90s case, it’s going to take awhile. Keep my phone number and call me in 2012 . ..

Posted in For Buyers 11 years ago at 7:56 am.

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