Is A Sentiment Shift On NYC’s Horizon: The Death of Delayed Purchase Gratification

With the Spring sales season soon upon us, many are wondering whether we will yet again see the robust activity we saw this time last year.  Without being overly optimistic, the answer to this question may well be “yes”.  You may have heard, or even experienced, that inventory continues to be quite tight, which generally would translate into dampened sales volume.   I have a theory, however:  volume will be driven by an increased meeting of the minds.

Why do I think this?  It appears that both buyers and sellers are shifting closer to the center, helping to define a new norm in today’s market.  If this trend continues, I expect activity to pick up based less on voluminous inventory and more on … do I dare? … Realism!  Discounts from asking prices have already dwindled down to the low single digits and the market is generating a steady momentum.  As both parties adjust to the market as it is versus as they would wish it to be, I expect that negotiations become smoother and transactions materialize more quickly than ever before. 

I’m not the only one who’s observing this trend.  Urban Digs’ Noah Rosenblatt shared similar thoughts just a few weeks ago:  

Looking back at this time last year, I would definitely say that the 2010 ‘active’ season (let’s put the Manhattan ‘active’ season between January-May or so) was strong. We had three consecutive months of 1,000+ new signed deals between March and May. When the markets see that kind of activity, most brokers, buyers and sellers out there feel the change.

He was referring to the following chart:

It made me think of where new buyers will come from.  I remember reading an interesting article not so long ago about the extent to which:  Americans are tired of saving and not spending, tired of putting their life on hold.  How applicable is this to the NYC  market and how long can people delay gratification, particularly in a city where temptation abounds with every NYT Real Estate section and every thawed new construction?  Life goes on and life needs continue evolving. 

If the theory of Americans’ fatigue of saving is true, if their ability to delay gratification has run its course, I anticipate that the next wave of buyers will come from the following two pools:

>    Growing families who have been able to continue squeezing into their current homes until now, delaying  the inevitable until the market stabilizes.

>    First time home buyers who avoided making the leap over the last two years and finally feel the worse is behind us.

Should my suspicions materialize, we can all expect some favorable bars to appear on Noah’s chart above and a significant shift in sentiment to be felt by all.