That Was Then, This Is Now

Isn’t it hard to believe that 2008 and the beginning of the recession took place a decade ago? For me that terrible feeling in my stomach after Bear Stearns folded, the feeling that I had no idea what would happen next or when any of us would make another real estate deal, still seems so recent.  At exactly this time ten years ago I negotiated a big condo deal for the firm on which the seller (unfortunately for him) wanted a long closing. By the time the closing date rolled around, Lehman Brothers was melting down and the buyer walked away from her (substantial) deposit and exited the market for a year or so. Then she came back and bought the same apartment for about 60% of her original contract price.

I had a similar experience seven years earlier, when another big deal we had made on Fifth Avenue fell off the table after 9/11. The buyer just walked away from his seven figure deposit and never looked back, moving to his country home for the next several years, after which he bought a pied-a-terre in the city but never really returned full time.

These deals were both learning experiences for me, and here’s what I learned: it’s always a good idea to buy and sell in the same market. I give all Warburg clients who ask me this advice. Today you know what the market is; tomorrow you don’t. Even when the economy and the market both seem strong, change is always just around the corner, for good or ill. Over the past twenty years we have seen the tech stock boom and bust, followed by 9/11, followed by the strongest market imaginable, followed by the worst recession in 70 years.   Since then we have experienced an eight year bull stock market which, in the past year, continued on an upward trajectory even as New York real estate prices leveled off and then declined. The moral of the story for buyers and sellers of real estate is simple. Try to back both of the deals into the garage at more or less the same time!

I tend to be both amused and frustrated by people (very often finance professionals) who believe they can time the market. Neither the top nor the bottom of any market is ever visible except in retrospect. The people I feel worst for are those who sell at what they believe to be the top of the market and move into rental housing so they can take advantage of the big dip they assure me is just around the corner. Nine times out of ten those families are still in their expensive rentals four to six years later, having guessed wrong about market behavior.

After thirty eight years in the brokerage business I believe I probably possess as much insight into market behavior as anyone does. While my prognostication skills have been pretty good over the years, what I know today about the future is that I just don’t know. Anything can happen. So if you are buying now, sell now too. If you are selling now, buy now too. Otherwise you expose yourself to market forces and chances which are WAY beyond any of our control.

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