Please be advised that tonight’s episode of “20/20” will include an interview with Brown Harris Stevens agent Kathy Sloane in which she claims that “Manhattan’s finest co-op apartments may have already lost a fourth of their value as a result of the financial crisis.”
So far, we have no evidence to support that claim. We have not seen a wave of panic selling; on the contrary, many homeowners have taken their apartments off the market until the economic news sorts itself out. Many of our buyers have adopted a wait-and-see stance.
Moreover, co-op values tend to fluctuate at a more glacial rate in comparison with other property types. Owners of co-ops have lots of equity in their apartments and co-operative rules do not allow for lots of leveraging. So even if prices are dropping, the idea that co-op values could plummet so perilously in so short a time is not borne out by history or circumstances.
What is occurring on Wall Street is still unfolding and it is completely premature to state what the ultimate impact of these events will be. Today’s announcement by the federal government and yesterday’s and today’s bullish stock market activity are very positive signs. While the economy, financial services market and personal financial investments are indeed taking a hit right now, this is the time where in past financial cycles where we real estate brokers previously saw a renewed interest in people investing and putting their money into tangible assets like real estate. The current credit crunch is different than previous shocks to the financial system so making predictions about demand for housing is difficult, but we remain optimistic.
The market is in a state of flux but New York has been through down cycles before. We also benefit from a strong demand for housing by virtue of our status as a global city. Real estate values don’t ever reset to zero like you see happening in the equities market. They’re not making any more land, and NYC real estate has always held a higher value relative to other markets. Cash is king right now and those cash buyers will be in a strong position during this unsettled period.
Over the long-term, real estate has always proven to be a solid investment. While the news from Wall Street will have some immediate effects on those that have been directly impacted, the long term health and outlook of the NYC market is not in doubt.
Those of you who worked in the industry will recall how some observers predicted the demise of Manhattan real estate after the events of 9/11 with rumors of a mass exodus to the suburbs. It never amounted to anything – in fact, the opposite turned out to be true. People flocked to New York City. The same magic that drew them to this great city then will continue to call them in the future.
Gary L. Malin, President
Citi Habitats
250 Park Avenue South, 11th Floor
New York, NY 10003
. Crystal Green - Licensed Real Estate Salesperson - Level Group New York, NY
