When the subprime crisis hit the national real estate market, New York City was largely unaffected. But the collapse of Lehman Brothers in September 2008 ended that almost overnight—though the cause had more to do with the resulting uncertainty about the economy than the foreclosures that damaged so many other communities.
%uFFFD“Most of my business stopped in September 2008 and didn’t really start to pick up until January,” says Richard Ferrari, senior vice president with Brown Harris Stevens. “It wasn’t a happy time for anybody—the sellers didn’t know the value of their home and the buyers didn’t know if they were overpaying.”
And while the market generally remains 20 percent to 30 percent off peak—depending on who you ask—most real estate experts agree that signs of recovery are here. “I don’t think you’re going to see the housing market drop any lower. I think it’s going go to go sideways for a while,” says Dottie Herman, president of Prudential Douglas Elliman. “The beginning of this year, real estate was very slow, but it’s really picked up and it’s come back.”
So, what does this mean for buyers and sellers? The consensus seems to be that we’re close enough to the bottom that waiting any longer to make a move is unlikely to result in significant savings or earnings.
Diane Ramirez, president of Halstead Property, LLC, advises sellers: “The best thing to do is get your property sold. You really lose value the longer you keep it on the market.” As a seller, it also doesn’t help to play the “what if” game— as in, what if I had only sold my place before the bubble burst? Says Ferrari, “Don’t be stuck on what’s sold in the past. Look at what the reality is today.” Jonathan Miller, president/CEO of Miller Samuel, Inc., notes that because the changing market is bringing in so many firsttime buyers, “the biggest movers are the entry-level types of apartments: studios, 1-bedrooms and anything under a million dollars.”
For those thinking about buying a home, acting now has its advantages. “Right now, you have properties at a discount, and interest rates are low and usually you don’t have them together,” Herman points out. Now’s the time to just say what your dream price is. “Buyers are not afraid in this market to make lowball offers,” observes Stuart Elliot, editor in chief of The Real Deal property website.
Prospective buyers should do their homework and take advantage of all of the information now available online, but Ramirez explains that finding a good broker with whom “you build a trust and a rapport is important, because numbers alone don’t tell you what’s a good value.” Miller advises potential buyers to “talk to two or three agents with different companies and get a comfort level with their local knowledge.”
Even renters can benefit from the current market. Elliot observes that “landlords are bending over backwards” to get tenants, by paying the broker’s commission and often giving a month or more of free rent on a one-year lease. Ramirez advises tenants to take advantage of the weak rental market and “shop around and pay as little as you can on a monthly basis.”
Credit remains the joker in the deck. While prices have fallen enough to draw new buyers, banks are enforcing much more stringent requirements. “Banks went from one extreme to the other. I’m hoping that the credit doesn’t stay as tight as it is now,” says Herman. To ensure their success in the market, buyers should make sure they are up-to-date on how much financing they qualify for, while sellers should carefully screen potential buyers and make sure the financing is solid before making any deals, to the point of accepting a lower bid if it contains more cash and is thus less likely to fall through.
Looking ahead to 2010, most experts agree that things will only improve. “I’m very optimistic,” says Ferrari.%uFFFD
