After the Fall

As our beautiful Labor Day week-end winds to a close, the Fall selling season begins. Given the complex and often contradictory messages which have animated our New York City real estate market this year, from the press, the Dow, and our clients and customers, predicting market behavior in the coming months defies simple answers.  And yet there are threads which allow me to suppose that the following will take place (and I will say that, modestly, that over the years, my predictions have been accurate more than 75% of the time):

• Prices will remain stable at or near current levels in the weeks ahead. Although the outlook for the US economy and job growth remain quite strong, the undertow of negative news coming from China and emerging markets around the globe has peeled back confidence among both local and international real estate buyers. As confidence is a primary driver in our commodified marketplace, I see very little likelihood of price increases this fall. I see prices holding at our near current levels: there could be some decreases if the stock market continues to seesaw.

• Foreign buyers will become increasingly price sensitive. We have already seen a substantial slowdown in absorption of super-luxury condos, as too much product has hit the market in certain neighborhoods, outstripping demand. The Russian presence is greatly diminished, and Asian buyers, be they Chinese, Indian, or Korean, have been the main event in 2015. As China’s economy continues to face headwinds I foresee most of these buyers containing their purchases to condominium units in the $10 million and under category. I think trading will remain brisk for these units, especially in prime locations or in buildings with terrific views and amenities, but units costing over $15 or $20 million are likely to sell slowly and require some developer incentives to move them off the inventory list.

• Sellers will have to make some hard decisions. Although inventory remains scarce, especially for smaller units and well located 6 to 9 room co-ops, buyers will enter the fall season more cautiously and carefully than they would in a bull stock market. Their offers may be lower, and their flexibility within negotiations more limited. This will require difficult discussions between agents and some sellers. The 2015 Fall market will NOT be a time when wide-eyed optimism on the part of sellers is likely to be rewarded. The seller who succeeds will offer tight pricing and a focus on getting the job done with the most likely and realistic buyer.

• The doomsayers will be out in force. Whenever there is a correction in the stock market, the pundits of disaster rush to the fore. “We are headed for a 50% correction.” “The next recession is already upon us.” I am no economist, but I don’t think so. As I said earlier, our American economic fundamentals remain relatively strong, and while we are certainly not impervious to being rocked by global forces, I do not see a disaster scenario unfolding at this time.

Prognostication is a dangerous game. And our real estate market lives in a destabilizing environment, with ultra-high prices being pumped by the press and reality TV and little attention or understanding paid to the nuances of the marketplace. That said, I live within this market all day, every day. Let’s check in in three months to see if I was right!