Upper West Side Open Houses Draw Crowds

Despite the rain, cold and dreary weather open houses were mobbed this week on the Upper West Side of Manhattan. Buyers are entering the market and they are buying. One pre-war 2 bedroom condo priced at $1,399,000 had about 40 people just 15 minutes after it opened.

About 30 people were at the 2 bedroom 2 bath apartments on the third floor of a post-war full service luxury building. One 2 bedroom condo that came on the market the beginning of the week at $1,150,00 is already in contract and the second open house was canceled. Many realtors planning on taking buyers back to see popular homes for a second time are too late. There is very little inventory in the $1M to $1.4M range.

What does it mean? Is it the Wall Street bonuses? Have we bottomed? Last weeks sell off in the stock market? Is New York the last market to decline the first to recover? We haven't had many foreclosures or sub-prime mortgages. The collapse of Lehman Brothers was what caused our market to decline. Prices are still down from a year ago but there is sales activity.

It's not about tax credits in this price range. Even first-time buyers looking at $1M+ apartments tend to have higher incomes than $125,000 single or $250,000 combined. The $6000 tax credit for current home owners is capped at an $800,000 purchase.

While there are all kinds of reports and gloomy economic studies, high unemployment and a poor national economy, we have to be honest about what we see. There are a lot of people with a lot of money buying real estate in Manhattan.

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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.