NOTES FROM DB

By Daniel J. Bollinger

It’s the middle of the summer, and the heat is melting more than the city. The stock market, the real estate market, and the world in general is “feeling the heat.” On Wall Street the market is continuing to trade sideways and more and more pundits on Squawk Box are forewarning a recession. The NYC real estate market is in grand flux. There have been some major events inside the industry. Some events that have occurred:

• Town Residential has ceased resales and leasing operations and is solely focusing on new development.
• Keller Williams Midtown had a major shakeup with massive layoffs and restructuring.
• Eastern Consolidated, a 37-year-old commercial brokerage, shut its doors through bankruptcy.

Watch for events like this to continue as the real estate market continues to soften as we transition into a “new reality.” Manhattan, Brooklyn, and Queens sales inventory is rising at the fastest pace on record. Recorded sales activity dropped dramatically in these markets as well. Simple economic laws of supply and demand forecast further softening. In times like these, “when the going gets tough, the tough get going,” or, they lower their prices to reflect a new market. Some good examples of this are:

• Chelsea’s Walker Tower Penthouse: Originally listed for $42mm, sold for $31mm, a roughly 25 percent price cut.
• 443 Greenwich’s priciest Penthouse: Originally listed for $58mm, sold for $43.7mm, another roughly 25 percent price cut.
• 432 Park Avenue: A ‘flipper’ got out of two apartments for the same price that he bought into them at $60mm, barely breaking even.

The NYC real estate market is shaking things up in response to this. For example, Corcoran Sunshine Group recently was removed from marketing 111 W 57th Street and a $30mm lawsuit ensued. There are great buying opportunities in times like these. Although sellers are reluctant to lower their prices to reflect the new ‘reality’ in today’s market, it is the perfect opportunity for buyers to get their “ducks in a row” and start making realistic offers on properties.