On September 15, 2008, Lehman Brothers investment bank went under in the largest bankruptcy of all time. The economy was already on the decline, other august companies had already foundered, and both presidential candidates were proclaiming the situation as the worst economic crisis to face the U.S. since the Great Depression.
The Lehman collapse was, among other things, the first death knell for the Manhattan real estate bull market. Thousands of potential buyers found themselves suddenly unemployed, and thousands of apartment owners became reluctant sellers.
In 2009, the real estate market will begin the slow process of surveying and adapting to the new landscape. No one expects it to be a big year for sales, but there remains a cautious optimism in the industry. There is a new president and a new consensus that bold and swift action must be taken to right the economic ship. And there is the widely held view that this is still New York City, and what is true for the real estate markets in the rest of the country has little or no truth here.
Buyers Are Out For Blood…
Time was, if you found an apartment you liked in Manhattan, you had to submit an offer immediately—usually at well above the asking price—to snag the deal. And if you borrowed money, your interest rate might be seven or eight percent.
Those days are gone—at least for the foreseeable future. The market is almost upside down from what it was just five years ago. Interest rates are low, but the inventory is high.