Every marketplace offers opportunities for someone. People have been taking a wait and see attitude with their investing and spending since September, so it will come as no surprise that with it, New York real estate has experienced a slowdown in the last quarter of 2008 too. It will contribute to a very different marketplace in 2009 than we've seen in several years.

Whether it is the right time to buy or sell a home is not solely based on the temperature of the market. It is more likely motivated by an individual's circumstances and should be considered in terms of the impact of the move in five years, not five months from now— real estate is the textbook example of illiquid, long term value. Manhattan apartments are still trading, at the right price, and with the right marketing. Chances are greater that it it will be at a slightly lower price than it might have been at the beginning of 2008. For most sellers it's a paper loss and they will still realize a very healthy margin of profit from their homes after experiencing the sharpest rise of values in history. My job is to provide guidance to buyers and sellers, which gets them to their goals in any marketplace. It may be somewhat counter intuitive, but if 2009 is the year where the market catches its breath, it is also where buyers seeking value are able to get what they seek. Here are five reasons why:

Mortgage interest rates have dropped dramatically

There is talk of rates dropping further. Chances are that the incoming Obama administration will do what they can to stimulate the economy and the housing market, by helping to keep mortgages low. It will help people to refinance existing loans, making their homes more affordable, and increasing their disposable income. It should stimulate home buying as well. Exactly how they might do that remains to be seen.

There is finally a good selection of apartments to choose from

Coops and resale properties are where the value is

New developments may be willing to offer incentives to buyers

Strong buyers— those with all-cash or substantial down payments, have an advantage

Wall Street is just about to finish the worst year since 1931. American housing markets are finishing their worst year in recorded history. New York’s economy is highly dependent on Wall Street...These three facts should have created the mother of all price crashes in New York City real estate...Yet New York’s housing prices are doing remarkably well relative to elsewhere in America.

A little light shone through the bleak economic news that I've been reading and posting to Newsreal lately. I ran across New York, New York: America’s Resilient City on the New York Times' Economix Blog, when it was tagged by a member on StreetEasy. Their commenters had a predictably negative take on it, since it points out that the name your own price Manhattan marketplace, is probably not anywhere close to a reality. In it, Harvard economist Edward Glaeser focuses on the historic resiliency of New York City in hard economic times, which he attributes to its ability to attract talented people, and the density in which we live. He puts his faith into the free exchange of ideas and the process of reinvention through innovation.

I hope that in the coming new year, economic stimulus and innovation go hand in hand. From the car manufacturers, to financial services and the oil companies, in 2008 we saw a business culture that fell asleep at the wheel because of entrenched market positions, hubris, and manipulation, rather than the creation of real value in their products. How could that not crash and burn eventually?

It took a national economic crisis to take the wind out of the sails of the Manhattan real estate market, even as the rest of the country was correcting for two years. I don't think that people should confuse that with a sinking ship. The wind eventually picks up again. Glaeser notes that Case-Schiller housing prices indicate a 7.5% drop in New York City prices compared with an 18% drop nationwide last year, faring much better than the rest of the country. Note that Case-Schiller tracks a more regional average of housing prices based on single family homes; so Manhattan coop/condo pricing may not be accurately reflected as a submarket. It would not surprise me if when our local market reports are released in January, the year over year picture is better than that. It is feeling pressure in 4Q 2008, but after looking at my year end bank statements, my money would have been better off being tied up in Manhattan properties rather than in stocks and bonds. The numbers indicate that Manhattan is still a place where people want to live, and unless that changes, housing will be in demand. Buyers looking for the "right" moment, should consider the favorable interest rates right now, the ample supply of apartments, the return of incentives and negotiating to our marketplace, and step boldly ahead.

New York, New York: America’s Resilient City »

Thanks to all our clients and customers for making 2008 the best one ever.

We've just improved the price of this ideally located duplex, in a federal style townhouse, to $9500 monthly. It is located on King Street, at the crossroads of Soho and the West Village. The tree lined block is lovely and away from tourist din; but accessible to the shops, restaurants and entertainment, which make downtown living great. It's a spacious and private 2200 square feet (aprox.), with three to four bedrooms, a real roof terrace, wood burning fireplaces, and central air. This unit is a modern, sunny apartment, in which everything has just been renovated. It is vacant and available right now.

see more about this listing »
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I've been working on the last few deals of the year and started a re-write of some of the top level web site sections on buying and selling real estate to address the challenges and opportunities of today's market, these will post in January. So I've been distracted from posting to the center column of the blog for the past couple of weeks. Feed subscribers know that the latest stories on real estate from various media sources continue to be clipped to NewsReal in the right column, as I read them; and I'll be resuming regular postings soon. For the moment, I thought that you might enjoy this recent podcast with Donald Trump, Jr. from Knowledge@Wharton. It's a Manhattan centric interview that talks about the international investment market for real estate too.

Back in the heady days of the real estate boom, property prices in New York City soared along with those in the rest of the U.S. When the subprime mortgage crisis hit and prices collapsed, the city's market held out longer than others— for two reasons. First, it is a major financial center with strong demand; and second, the weak dollar made it possible for international buyers and investors to find deals at discounts as high as 40%. Where will the New York market be in 2009? Where are the most attractive deals to be found in emerging markets? In a podcast recorded at the Knowledge@Wharton Real Estate Forum on Emerging Markets on December 2, Donald Trump, Jr., executive vice president of development and acquisitions at the Trump Organization, speaks about those questions and more. He also discusses how he views his unique contribution to expanding the Trump brand overseas, building on the foundation laid by his famous father.

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Is the cavalry coming to rescue troubled homeowners?

Despite soaring foreclosure rates, President Bush and other Republicans have not made this a top priority, and Treasury Secretary Henry Paulson has refused to draw on the $700 billion rescue fund to help homeowners, saying that saving financial institutions is more important. But this could change next year: President-elect Barak Obama and fellow Democrats say reducing foreclosures is crucial to attacking the financial crisis and economic downturn.

"The financial sector weaknesses all originate in the housing market," says Jack M. Guttentag, professor of finance emeritus at Wharton. "If we don't solve the housing problem, then the weaknesses in the financial sector are going to continue to multiply."

Testifying November 18 before the House Committee on Financial Services, Sheila C. Bair, chairman of the Federal Deposit Insurance Corp., agreed: "Minimizing foreclosures is essential to the broader effort to stabilize global financial markets and the U.S. economy." According to Wharton real estate professor Susan M. Wachter, it is essential to break the vicious cycle of foreclosures driving down home prices, spurring more foreclosures. "The housing crisis is still a major source of the broader economic crisis that we find ourselves in."

Other experts are not so sure. "I wouldn't bail out people who made stupid mistakes," says Kent Smetters, professor of insurance and risk management at Wharton, arguing that borrowers and lenders should suffer the consequences of risks gone bad. Trying to mitigate the consequences won't stop the financial train wreck, just shift it to slow motion, he argues. "The alternative is to say we're going to let the train wreck happen. What that does is to allow us to clear the tracks sooner."

On November 26, the Federal Reserve and Treasury Department announced an $800 billion infusion in the credit markets, including $600 billion to buy debt issued by mortgage giants Fannie Mae, Freddie Mac and the Federal Home Loan Bank. The move immediately drove the interest rate on 30-year fixed-rate mortgages down to about 5.5% from 6%, and there were reports of a flurry of loan applications from people looking to refinance mortgages or buy homes.

Wachter said the move is a key step to reviving the housing market and eventually stopping the downward spiral of home prices.

The lower rates could help some homeowners cut monthly payments by refinancing, perhaps allowing some to stay in homes they otherwise would lose. But lower rates alone will not help many homeowners who owe more than their homes are now worth, because these borrowers will not qualify for new loans big enough to pay off the old ones. Reducing the number of expected foreclosures would probably require efforts tailored to this problem, such as a recent program proposed by the FDIC's Bair. Even if such programs are enacted, it is not clear how well they would work.

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We join real estate Attorney Keith Schuman for some lawerly tips on the decision making process. Feel free to ask questions in the comments section.

Once you have determined how much you can afford to spend for your new home and have assembled your team of real estate professionals to assist you in this process, you can focus on the type of home you would like to purchase. If you are working with a real estate broker, be sure he or she knows what your priorities and requirements are for a home and neighborhood. Defining your price range, house or apartment size and amenities will help your broker with the search. Remember, flexibility in any of these areas will greatly increase your chances of finding the best home for you. Your broker will schedule an appointment with you to show you apartments that match your requirements. You also should attend as many open houses as you can even if your broker is not available. However, be sure you sign in under your broker’s name so that he or she can assist you with the purchase if you decide to make an offer.

A pre-war one bedroom co-op at 435 East 57th Street.

• What is the visible condition of the home’s exterior, and in the case of a coop or condo, the lobby, the elevators, and the hallways?
• Has the home been well maintained, or does it require major repairs or replacements?
• If you are looking at a coop or a condo, where is the apartment situated in the building? An apartment which faces the front of a building will provide light but might be exposed to more traffic and noise.
• What is the condition of the other homes or buildings on the block? If neighboring homes or buildings are in poor condition, it could affect resale values.
• How close is the home to shopping, schools, parking garages, and public transportation? Nearby services can add value to a home.
• Are there community amenities close by? What is the reputation of the public schools in the neighborhood? Parks, museums, restaurants, and good public school districts can add value to the property.
• How long has the home been on the market? A home that is on the market for a long time may indicate a problem with the home or property or an inflexible seller.

After you have viewed many homes, take some time to think about which one would be best for you. Use all the information that you have collected to compare the various homes before you commit to one. Weigh all the pros and cons. One home may have all the features that you want, but the price may be too high. Another home may need significant cosmetic work, but may have other attractive features and may be in the right price range. Consider the monthly carrying charges and the resale value of the home and make sure that you can obtain the required financing before you make your final decision.

Types of Home Ownership

• Sole Ownership. One person owns the home entirely.
• Joint Tenancy with Right of Survivorship. When two or more people own an equal undivided interest in the home. If one owner dies, the surviving owner automatically becomes the owner of the deceased owner’s interest in the home.
• Tenancy by the Entirety. The same as joint tenancy with right of survivorship except that it only applies to married couples. If one spouse dies, the surviving spouse automatically becomes the sole owner.
• Tenancy in Common. Two or more persons own a share of the ownership (generally 50/50) of the home without rights of survivorship.

About the author: Keith A. Schuman, Esq. is the founder of Schuman & Associates, LLC, a full service real estate firm that provides legal services to its clients, through all aspects of their transactions. Keith is a frequent contributor to comitini.com. Contact him at keith@schumanlawfirm.com or phone 212.490.0100.

related posts:
Who are the key advisors in buying a Manhattan home?
What are the actual differences between townhouses, coops, condos and cond-ops?
What are the income tax benefits of owning a home
When should I buy a home?

I can't help but to take a moment, a bit off topic for this blog, to celebrate the triumph of our democracy today in electing Barack Obama as the next President of the United States. The cheering about 11 PM could be heard on the streets near my home in Tribeca, as the networks announced their projections . I'm sure they were heard across the country and beyond. I've never seen a leader before with the ability to inspire so many people to renew their faith in the ideals and promise of America. Congratulations to President-Elect Obama and to the American people on this historic evening.

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I'm representing this sunny, quiet one bedroom apartment in one of Roth's buildings for Bing & Bing at 435 East 57th Street in Sutton. Well proportioned rooms, a powder room and white glove doorman service make this a classic city co-op home. You can see the listing here and download a fact sheet for more Information. Its being shown by appointment daily.

from our friends at the Wharton school...

Richard Marston and Jeremy Siegel: Will the Bank Plan Revive Global Markets?

With stock markets in freefall, U.S. Treasury Secretary Henry Paulson announced on Tuesday that the government's effort to unlock credit markets would include direct investments of $250 billion in bank equities. He also warned bankers not to hoard the money, but to use it to make the loans that lubricate the nation's economy. Similar moves announced by European governments over the weekend, along with anticipation that the U.S. would follow suit, sent global stock markets rocketing upward on Monday. But the moves signal significant changes in the financial landscape, moving leverage and power from Wall Street to Washington. In separate interviews, Wharton finance professors Richard Marston and Jeremy Siegel tell Knowledge@Wharton that while the investment is not without risk, it appears to be the best hope for restoring confidence in credit and stock markets— and reducing the severity of a recession that is all but certain to come.

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