Property Grunt

Saturday, January 17, 2009

Are they really brave?

For the Brave, the Moment Is Now

I just read the article above and it pretty much confirms what I have heard which is motivated buyers are entering the field.

This is not me raining on anyone's parade. I am just stressing that people exercise some common sense and not get overtaken by irrational exuberance. This is not an environment to flip. You buy now, you are holding onto to that apartment for at least ten years. So better damn well make sure you can afford it. And make sure you have the proper mortgage. Go over a fine tooth comb over what you are considering buying. That means look at every detail, even if it means checking out the neighborhood at night to see how safe it is. You have think like these two buyers.

Barbara Rellstab, a real estate broker and former actress, is expecting a baby in May. She fell in love with the first apartment that she looked at. It is a 1,352-square-foot one-bedroom apartment with a den and a private rear garden on the first floor of an elegantly restored former church at 2056 Fifth Avenue and West 127th Street in Upper Manhattan.

The asking price was $699,000, but she bought it for $9,000 less. The final price was $270,000, or 28 percent, below its asking price as of March 2008. Prices might fall further, she said, but she bought it late last month. “I need the apartment now,” she said.

Some buyers are driven to buy in the current market because they feel rents have not fallen as fast as sale prices.

Two years ago when his lease was up, James Bobrowski, an accountant, looked for apartments with Lawrence Rich, a broker at Prudential Douglas Elliman. But the market was over his head.

With his lease up again, Mr. Bobrowski went looking again and at the end of October signed a contract to buy a one-bedroom apartment in a high-rise at 240 East 40th Street, for $700,000, Mr. Rich said, 5 percent off the $740,000 asking price. He closed last month.

Still, a great uncertainty for buyers in the current market is whether prices will fall further, as Ms. Rellstab fears.

Both of these buyers are in situations where they need to take advantage of the environment immediately. One is expecting a baby and the other is dealing with rents not leveling with a falling sales market. So there is an obvious need to get the buyer's ball rolling. However, buyers are not stupid.

Still, a great uncertainty for buyers in the current market is whether prices will fall further, as Ms. Rellstab fears

They know they are in amidst of a blizzard. So they are at risk at losing money in this market.

So buyers, take your time, this new market will be around for awhile.