Buyer Competition on the Rise

Over the past year or so, buyers looking to invest in Manhattan real estate have had the upper hand over sellers. With transactions virtually frozen in the wake of last year's collapse of Lehman Brothers, sellers grew alarmed, dropping prices and offering incentives to tempt purchasers.

Now, for the first time since the collapse of the market, many market experts are speculating that this heyday for buyers may be nearing its end—or that at least their advantage is shrinking.

More buyers—especially those who hesitated to buy during the financial crisis—are now searching for bargain prices as the stock market recovers and prices drop.

“Brokers are starting to notice more competition,” says Dan Babush, founder of Alfred Real Estate. “Now that prices are at an all time low, buyers who had been patient are stepping back into the game.”

Upper West Side broker Babush has noticed a large number of buyers looking for "classic six" apartments priced under $1.5 million. The sudden interest in these properties has resulted in multiple bids for this type of property. In response, sellers of these well-priced apartments no longer have to negotiate as much.

Another sign that buyers might be losing the upper hand is home seekers have started to complain about lack of inventory. The demand for Manhattan homes is extremely high, and the inventory cannot match it. Trying to find homes in the most desirable neighborhoods has become very competitive.

There's one major stipulation to all of this: Unlike in the boom, overpriced homes simply don't sell. Appropriate pricing brings the best results, and with the market still offering some of the lowest prices in decades, apartments priced within that range generally sell in a matter of weeks.

The new development market is also starting to see inventory drop as the supply of new projects dries up. These developments have gotten a boost in sales from international buyers who are showing a renewed interest in the city, prompted by low prices.

As a result of all these factors, homeowners who had avoided putting their homes on the market are having a change of heart. Brokers are being contacted by sellers who are contemplating selling their homes sometime in the near future. With open houses being packed the past month or so, sellers are gaining confidence that there will be an interest in their home.