Have we entered a new market, possibly more of a buyer’s market again? The bad economic news on Friday seems to be compounded by worsening news from Europe and the world is learning just how inter-connected the world economies truly are. When retail sales slow in Europe, it affects everyone, everywhere……maybe just a little in actual tangible ways, but very much so psychologically.
New York City real estate has experienced many ‘MOMENTS’ and I think we may be entering one right now, where a pause in the economic future, a pause in the political future and the approach of Summer could allow some buyers the opportunity to ‘make deals’……I am not talking about huge discounts or bargains, but I am seeing the very wealthy buyer stepping in right now with a surprising aggression to buy, and I think its because they do see this small window of opportunity to buy what they like while some stall.
I remember working with a couple a few years ago who are extremely successful and powerful financial types…..they told me their story how they learned the very hard (and very expensive) way that New York City experiences moments when the market pauses for a while…..but then it continues again on its upward trend. They had mistakenly guessed that they could time the market, buy at a low, and reap the rewards. Around the time of the ‘Asian flu’, they waited about 12 months in the hopes of prices dropping …..they estimate that cost them about $ 2 million. Not only did pricing really not drop that much (it did on the lesser quality properties) but worse, the properties they would have wanted to buy were removed from the market. And then when the market rebounded, they were more expensive than before. The lesson is a lesson about timing market lows and highs, when your life keeps marching on. When viewed purely from an investment perspective it makes all the sense in the world to try and time the markets: when it comes to a home, the considerations should be very different.
Looking back now, they bought their current home (about 6 years ago)at a time when the market was very, very strong. Since then it’s value has improved by at least 30-40%. And their kids have had a place to call home. Could they have bought it for less at a moment some time between then and now, maybe during the Lehman crisis? Possibly, but even then its doubtful the asking price combined with the interest rates would have saved them much in the big picture. There is not much discounting when it comes to life’s worst enemy: time.