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I have just returned from a relocation conference in Phoenix where the Cendant Mobility Network awarded Olshan Realty the 5-star Circle of Excellence award for the second year in a row.
We are proud of this accomplishment. It is recognition of our ability to help relocate corporate executives by providing a high level of service with a full compliment of market data -- enabling the customer to have confidence when making a decision. We feel that our 21-year experience with many different markets gives us insight into the present and future.
The question our clients and colleagues are now asking me is: where will New York residential real estate go in the face of a falling stock market?
I am here to report that prices have stabilized. The stock market decline has put a brake on the roaring 20% per year price increases realized in the last few years. Buyers simply are feeling more cautious and there are fewer bidding wars on apartments. All signs point to a more extended marketing time -- 90 to 120 days -- which is the norm across the country. I do believe, however, that the second half of 2001 will result in price increases of less than 10%.
My reasoning moves beyond the stock market and points to the concept of SUPPLY. New York is in the throes of an acute inventory crisis. I see no economic force or significant development that indicates the prospect of a surge in co-op and condo inventory. Almost every major location has been developed and the one big one left -- Columbus Circle on the west side -- is set to offer condo prices starting at $3,000 per square foot.
Ten years ago, New York was a different place. My company was involved as the broker in the group moves of the corporate headquarters of Exxon, Mobil, J.C. Penney and American Home Products -- all leaving the state and city. New York was riddled by recession and crime. Then along came Mayor Rudolph Giuliani riding the wave of prosperity, resurrecting the city and restoring the quality of life. The renovation of Times Square became the symbolic event in the rebirth of New York. Corporations started to stay and grow, fueling a demographic shift in the population. More and more families began living in the city along with a growing audience of international buyers. New York regained its lead as a business and cultural mecca.
So if you are trying to make some sense out of the stock market, it is the importance of diversifying your portfolio. Real estate goes up and down but it does not evaporate. Prime locations are like blue chip stocks: they hold up in unpredictable weather. And residential real estate gives you the added value of having a place to live. The dividend here is living in one of the greatest cities in the world.
Hence my prediction: prices will go up modestly.
Private Wealth Real Estate Services
Chief of Research
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