Halstead Property

Mentioned in this Article:

Gregory J. Heym
Executive Vice President, Chief Economist

Who'll Blink First

BY BILL CRESENZO

Call 2009 the Year of the Lion, because brokers are going have to roar louder than ever.

Buyers have been waiting for years for prices to come down, and they'll continue to wait into 2009, say the market experts. Sellers, meanwhile, will hold out as long as they can to get the highest price they can for their apartments.
The brokers will be caught in the middle of the stare downs between buyers and sellers, both waiting for the other to blink.

"Obviously, buyers have certain expectations and they feel empowered these days," said Gregory Heym, chief economist for Halstead Property. "(For brokers), a lot of it is doing what you are always doing — making sure that your apartments are priced correctly."

The brokers that will be left standing are the ones who know the art of diplomacy, negotiation and most of all, hard work.

Here is what the experts in the New York Real Estate biz have to say about how the think 2009 will shape up.

Pamela Liebman, president, The Corcoran Group

"There is a lot of hope that the new administration will inject confidence in the economy as a whole and into real estate in general. I think we will be looking at a more normal market [in 2009]. The frenzy has been replaced by the bread and butter of real estate — 'I just want a good value.' A lot of the excitement of buying and trading real estate is not going to be there the way that it was. We have to look at the past several years as a wonderful ride that we all benefited from greatly but we couldn't sustain that forever."

She suspects that many brokers will give up the profession in 2009.

"The brokers who are not well-versed in all types of markets are going to feel some pain. There will not be as many transactions and a lot of brokers are going to vie for a bigger piece of a smaller pie. Some people will be shaken out of the business becuase they won't be able to sustain themselves."

She says that a new crop of brokers, those who didn't get used to sky-high commissions, will prevail.

"You can be a brand new broker and do extremely well in this market because you won't be tainted by the past. You will have a fresh outlook. They don't know what it was like to have 40 people show up at an open house and have nine bids the next day. And they don't tell the sellers what they want to hear, but what they need to hear."

Her advice for 2009?

"It is really important to remain positive and surround yourself with positive people, and stay away from anybody who is putting out a lot of negative energy and has nothing to do but complain about the world and the market. Success breeds success. There and make yourself busy."

Jacky Teplitzky, executive vice president, Prudential Douglass Elliman

Teplitzky says that 2008 "can be divided into before Sept. 15 and after Sept. 15" — a day she calls the "9/11 of the real estate world." Lehman Brothers went under, AIG got a bailout and Bank of America bought Merrill Lynch.

She also said that the Bernie Madoff scandal affected New York real estate more than people realize, given the Jewish population's prominence in New York real estate.

Teplitzky says that brokers are going to have significantly readjust their attitudes and their ways of thinking.

"We have a very severe problem in New York City. We are going to have to redirect our thinking. In the rest of the country, it was a gradual thing, so everyone had time to grasp the situation and readjust. In New York, everything is black and white, and suddenly it became black. I still see brokers in La-La land. I recently had a top broker and he had an overpriced and apartment and I said, "Are you from Mars?" The apartment is still on the market."

"We're having a huge problem with brokers because they are not willing to put their foot down with sellers. If I tell a seller that I am not willing to take you on because you have priced your apartment too high, the next broker will take them on. Brokers are starving and it looks good to have a lot of listings on their websites. We are all doing an incredible disservice and this will go on for another year and become a stalemate."

Teplitzky added that while people in the real estate business might blame job losses on Wall Street as a major blow, but she thinks it's incorrect "to think that everything we do in New York is Wall Street."

Marc Lewis, president of Century 21 NY Metro

"Everyone says that this is worse than any other time, but a good broker knows how to generate volume, whether it is from buyers or sellers. As long as you generate a lot of deals, it doesn't matter who's paying you."

He said that renters can expect lots of incentives and perks this year, such salesperson."

Penny Crone, broker, Prudential Douglas Elliman

"I think it's going to be a great year. I think its going to be a terrifc opportunity with President Obama coming in and it's New York — we have surived everything else and we will continue to survive. I'm very optimistic. I don't pay attention to anybody. I have blinders on. I just do my job and move on. "

Jorden Tepper, executive director of sales for Century 21 NY Metro

Tepper says that buyers are still waiting for bigger price declines, which hasn't yet happened.

"We also are seeing sellers who are certainly unwilling to relinquish their lofty expectations that they were fed by the last couple of years. I am hopeful
the sellers will begin to realize that we are in a different reality now and relinquish some of those lofty expectations."

Tepper said that open houses are still getting pretty good turnouts, but the problem is that the sellers are unwilling to lower the asking prices and the apartments aren't selling.

By the same token, buyers are sitting on the sidelines, prompted in large part by media reports that it is a buyer's market.

"The media has done quite a job in setting the bar and expectations for certain things to transpire. From where I sit, I think that we really need to inform buyers and sellers about our market because there is so much that's talked about on the news that it not necessarily market-specific to Manhattan."

Ken Horn, president, Alchemy Properties

In the last month of 2008, Horn's company closed on 40 apartments.

"I guess we were lucky, but I will say that we still have an enormous amount of traffic on remaining units."

Horn predicts that as prices at prime locations such as the Upper East Side, Greenwich Village, et. al decline, secondary neighborhoods, such as the Lower East Side and Harlem, will also suffer.

"Secondary locations are going to feel a lot of the pain. These neighborhoods became choices to people because they were priced out of other areas and when pricing becomes moderated in the primary areas, people are going to be look there before they look in the secondary areas. It's the nature of the beast."

Horn also predicts that buyers will eschew buying unfinished projects in favor of ones that are ready to live in, or nearly complete, mainly because two years ago, worrying about whether the builder has financing wasn't an issue. In 2009, it will be a major one.

"Buyers out there want to see the finished product. They want to be able to walk into their units and see the light in there and they want to know that the development will be finished."

Wednesday, January 14, 2009