Bids were placed on all sizes of apartments, with bidding wars extremely common. Prices were stable and the negotiability factor, between the asking and selling prices, declined in enough cases to call it a trend. Larger apartments had multiple bids; smaller one-bedroom units and studios were not moving as quickly. Yet even those were closing throughout the quarter. The message to sellers was loud and clear, this is a great time to sell! As apartments came on the market, buyers absorbed the new inventory. We expect a continuation of this activity through the next quarter. With renewed buyer interest, apartments coming on the market can afford to increase prices, but just a little. While huge asking price adjustments upwards won’t attract savvy customers, the activity level is brisk and final closing prices are looking good. Positive news for buyers is that prices are still down from an all-time high and it is worth taking a look.

Sellers are sitting on the sidelines waiting for their lost equity to return and are only moving for lifestyle changes such as relocation, downsizing, new baby on the way, etc. The second quarter opened with a pause due to a shift in market conditions. Buyers and sellers were questioning the market, trying to determine what the actual conditions were. Both sides were seeing increased activity, agents were noticing increased web traffic as soon as a new listing was released and then came the bidding wars and tightening of prices. There are clear boundaries on how far up buyers will bid prices—every penny is still being monitored and the buyer concept of the moment is still "value minded." There is a large number of cash buyers out there, who are more important to sellers then ever before. Banks continue to tighten lending policies and financing is the most difficult part of Manhattan real estate.

And most adjustable rates are between 2.25% and 3%! These extraordinarily low rates have brought the cost of ownership down considerably, making Manhattan most attractive to potential buyers, who are coming out of hiding. Those potential buyers are finding a market marked by inventory numbers that are still at dramatically low levels. Such tight inventory should help apartment prices swing upward. Prices are relatively stable with some small price movement in the larger units, including unique loft properties. Yet overall, prices are level with last quarter. When an apartment is priced appropriately, buyers come out to play, resulting in bidding wars here and there, which is still a surprise. Sellers are starting to realize that tight inventory puts them in the driver’s seat. As prices move higher, more buyers will be driven into the marketplace, fearful of missing the bottom pricing and record low mortgage rates.

Buyers are looking at the advantages of condos over coops. Condo buildings are seeing increasing prices compared to coops on a percentage basis. Demand is even among all sizes of apartments in the midtown area, but a shortage of larger-sized units is obvious. The recent increase in investor purchases is another source of strength, with both domestic as well as foreign buyers in the market. Murray Hill and the West 50s neighborhoods are strong; record interest rates under 4% are bedrocking mortgage attractiveness. Of course, financing is more stringent in the underwriting stage, but this is the new reality, both now and in the future. The New York economy is looking up and the real estate market is in lockstep with it, if not in the lead. What is needed to ignite the market is more fuel in the form of inventory. It is tough to get the fire roaring without it. New inventory is just out of sight, waiting to hit the street.