It's A Small World After All

Here at Warburg Realty we’ve been watching the recent stock market gyrations with fascination. With economic recovery apparently on track in the US, the precipitous fall of the stock market last week demonstrates beyond the shadow of a doubt that we are a global economy. If debt in Greece can roil the Dow, we are well past the era of being able to pretend that what happens “over there” need not be our concern. And we probably have to wish a fond adieu to those condo seekers shopping with Euros.

So I asked our agents what they see going on in the market now, and specifically whether there was any palpable reaction to the change in the value of the stock market. Here is what they told me:

1. Overall the market is slower than it was during the first four months of the year. Buyers are still buying but they prefer to move slowly. That said, mint condition properties and those in the most desirable locations are still much in demand.

2. The good properties are still selling with multiple offers, and sometimes above the asking price. Prices for some top condition, top location properties are at all time highs.

3. Many reported that when a hot new listing comes on, it takes days or even a week to get an appointment to see it. There is a backlog of buyers and little inventory.

4. Appraisal issues are still causing problems in many deals. Even when the properties appraise at the contract price, mortgages are taking forever.

5. Sellers are aware that the anticipated capital gains tax increase could make selling now a smart idea.

6. A number of agents reported strength in the market for properties under $1.5M. Proper pricing seems to be key.

7. The rental market has firmed up considerably. When the market was weaker, property owners would frequently pay the brokerage commission as an inducement to tenants. Now owners paying commissions seems to be a thing of the past.

8. There does seem to be evidence that the volatility in the stock market is affecting buyers. Several people pulled out of deals last week using that as the reason.

I find number 8 of particular interest today. EVERY buyer who bought a year ago, when people were afraid, got a terrific deal and is feeling terrific today. But the minute there is a blip in the market, some buyers panic and rush for the exits. They will regret it. Buying when people are nervous is always a good idea; therein lies opportunity. Warren Buffett notes that “you pay a very high price…for a cheery consensus.” So…here’s my variant on Caveat Emptor: let the buyer be brave! The market seems slower. Use the opportunity.

I would love to hear your market observations. Please post a response, or email – fpeters@warburgrealty.com .