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The Pendulum Swings Back To The Middle

Source: NYT

In Saturday’s front page story In Hoping for Best in Home Sales, 2 Sides Sit Tight [NYT] [1] Vikas Bajaj and David Leonhardt explore the state of balance that is returning to the real estate market: As a result, the housing market is now in a deeply confusing state, with average prices still rising even though homes are taking much longer to sell and the number on the market has soared. Sometime soon — probably in the spring, the peak sales season — one side or the other will have to capitulate, many economists and industry executives predict.

(shameless plug: This article used our stats for Manhattan and NAR for the remainder of the country.)

One of my main concerns about a shift in the pendulum has been the void that occurs between buyers and sellers and how long it lasts. Will the sellers cave and be more negotiable or will the buyers simply walk away?

Right now, its been a little of both as the number of transactions have clearly declined but prices are holding, if not rising. Cendant describes it as a pregnant pause, a disconnect between sellers and buyers.

In Stephanie Rosenbloom’s front page real estate section article A Slower Market, With Wall Street Fizz [NYT] [2] she describes the market as more sober and measured. The pace has slowed, there is more inventory and buyers are taking time to shop around.

(shameless plug: this article uses our stats as well.)

Buyers have more inventory to choose from and properties are staying on the market longer. She comments on how Wall Street bonus money is so important to the Manhattan market and uses this quote: “We are so dependent on the money from Wall Street,” said Mr. Lewis. “If Wall Street is a shark, the real estate industry is the thing that cleans its teeth.”

Basically, the message in the article is that the market is still doing fine but its not as frenzied as in years past. One item I thought was interesting was that buyers are waiting longer to make offers and at lower amounts yet are often surprised to find that the apartment has already been sold. If you believe all that you read, you have the impression that there are no buyers out there.