Many of us make resolutions or predictions at this time of year. I have a wish list that expresses my hopes for changes that will benefit buyers and sellers as well as the entire city. The list contains some of the issues we have been writing about during the past year including the overly stringent requirements of lending institutions, the disparity between New York and the rest of the country and the view that perceptions in real estate that don’t always equate to reality.
Uppermost on my list is the need for banks and other financial institutions to stop over-regulating and creating too stringent guidelines for loan applications. These tougher guidelines are not feasible in New York, which is more finessed and sophisticated than the rest of the country. The institutions are creating barriers to what I call “non-vanilla” loans, those with financial statements containing trust money, investments and stock options. The institutions’ practices are delaying the process for just about every non-cash deal and show a lack of understanding of the nuances that play out here. I am not looking for the banks to return to the days of minimal review, but to be realistic. C’mon people, use some common sense.
I hope buyers and sellers recognize the adjustments that are playing out in relation to the natural progression of inflation. This, obviously, influences the price of an apartment. It also has a great influence on mortgages. With rates low, the actual value of monthly payments in adjusted dollars for a 10 or 30-year mortgage is at an all-time low. This should be taken into consideration as deals are structured.
With the rates at historic lows, buyers would be smart to take advantage of the numerous opportunities available and adopt an aggressive approach that includes considering the intrinsic value of a property and realizing that the market may not go lower. The longer buyers wait, the less chance there is for value. At the end of the day, while waiting for the double-dip, prices could go up. Units priced well are selling and sellers today seem confident that prices will rise. I hope all parties keep their expectations in perspective.
With the rates at historic lows, buyers would be smart to take advantage of the numerous opportunities available and adopt an aggressive approach that includes considering the intrinsic value of a property and realizing that the market may not go lower. The longer buyers wait, the less chance there is for value. At the end of the day, while waiting for the double-dip, prices could go up. Units priced well are selling and sellers today seem confident that prices will rise. I hope all parties keep their expectations in perspective.
Finally, part of this perception problem is today’s information overload, which can confuse and obfuscate what is actually happening. Buyers and sellers should look at the facts and not at generalizations. While we hear that the market is flat or prices are down, the price per square foot, an excellent barometer, is increasing. I had a busy end of the year and am seeing an increase in both the top and low-ends of the market. Everyone has an opinion about the market, but at the end of the day we need to look at the facts.
I don’t know if my wishes will be granted, but I do know if there is rationality in the marketplace we can have a stable and positive year.
My best to everyone for a happy, healthy and successful 2011.
