What's Next?

As I anticipated, I got a lot of feedback to last week’s blog, “The Blame Game.” Some was very positive, some not so positive. But everyone seemed to acknowledge that the Occupy Wall Street protests are giving voice to a national sense of concern about the status quo. And everyone seemed to share the same sense of apprehension and uncertainty about the future.

Real estate purchases, in every era except the anomalous period between 2003 and 2008, have always been about the future. Real estate is big, complex, and illiquid. It is not, or at least should not be, a short term investment. It serves many functions: it can be a home, an income producing investment, a concrete (literally) hedge against volatility, or a safe place to park money extracted from something else. I was amused but not surprised to note that on tonight’s episode of the new Showtime series “Homeland”, the money ultimately destined to fund a terrorist action is converted from jewels into real estate. A house near the airport. What could be a safer place for money than that?

So why is it, with so much confusion and concern about what is going on in the U.S. and our future, that the New York residential market has held up so well? I see it as a sign of hope. Buying signals belief. A renter is always transient, but a buyer is putting down roots, expressing confidence in the viability of the environment. To see people from all over the world putting their money into New York real estate is to believe in the health and vitality of our city, and to have faith that the problems we face are difficult but not insurmountable.  No other industry more profoundly reflects the underlying zeitgeist. A real estate purchase means “I am sticking around, and I am confident that over time this town is a good place for investment.” In addition, for those who are buying their real estate as a home, it means “I believe in New York as a place to call home.”

New Yorkers, even investment bankers who are always anticipating the next crash, vote their confidence through their real estate purchases, precisely because those purchases are both illiquid and long term. So our fundamentally healthy, fundamentally stable market carries the result of that vote: there’s a lot to overcome, there’s a lot to fix. But we believe.