Residential Realities March 2012
March 28, 2012
Cue The Jaws Theme: It’s getting a little scary out there…
Perhaps the unseasonable March weather has been caused by the heat of real estate activity in the Manhattan market. The shift may not be seismic, but the deal plates are definitely in motion and the languid real estate market seems to be a thing of the past. Deal pressure is back and buyers are concerned about losing deals to multiple bids or additional offers that are made while the contract is being negotiated.
Don’t Dilly-Dally Due Diligence
As I’ve been suggesting lately, whenever the market pressure increases, a buyer can be forced to accept the deal without thorough due diligence being concluded before the deposit check is delivered. In one recent situation, a newly installed managing agent could not locate the Board minutes, but the suggestion was made that if the buyer delayed much longer, the open houses would get revved up again and the buyer could lose the apartment. In the end, the due diligence was completed and the deal was not lost. When the market gets irrational, sometimes buyers are asked to behave in the same manner...irrationally.
The New, New, New Normal
When this blog originated several years ago, one of my first posts was entitled "The New Normal". Since that time, what constitutes “normal” in this market has changed a number of times and is still evolving. The window on low pricing seems to be shutting slowly and buyers are concerned about increased costs and rising interest rates. Both are valid concerns. But ask any real estate attorney who handles transactions on a daily basis, and you will find a common theme. The so-called “basic” co-op or condo closing has gotten significantly more complicated, to the point where there is no longer any such thing as basic. It’s more a question of the level of complexity.
Residential Reality: Do Your Due Dilly
As the market resets, buyers are well advised to research all aspects of their proposed purchases to the greatest extent possible. The safety net of guaranteed yearly double digit appreciation will not return for many years, if ever. A purchase must be based upon the metrics at the time of closing, with as much attention paid to the possibility of negative developments in the future as there is to the always eagerly anticipated upside.
March 5, 2012--The Hamptons Settle Down...
An article in the print edition of Barron’s on Saturday entitled “The 20 Best Places for Second Homes”, offers more evidence that recovery in New York is ahead of the curve. Of the 20 best locations, the Hamptons was number one. Not a surprise. What I found interesting was that the median price of a Hamptons home remained unchanged from 2010 to 2011. Prices were flat and that appears to be a good sign. Compared to most of the other places on the list, which almost all showed a year-to-year decrease (with Martha's Vineyard in apparent free fall), the east end was stable. Although pricing at the beach has been decimated, stability bodes well for things to start the slow turn around. If folks are looking for the bottom, maybe it's been found. Although Manhattan and the Hampton communities don't always move in lock step, one could argue that evidence of stability in each locale, will create synergies to help both places...