Along with my various journalistic endeavors, I'm also a licensed real estate broker and I represent a wide range of buyers and sellers in New York City. Prior to the collapse of the real estate market, bidding wars on residential properties were commonplace in Manhattan. I thought that they had become a thing of the past until last week, when I was representing a buyer for a two bedroom property in Tudor City and was asked by the seller's broker to present a "best and final" offer by day's end.
The asking price was already high, yet the property received multiple offers and a deal was made (with someone else) for more than the asking price. This reminded me of the heady days of Manhattan real estate, when apartments where trading like baseball cards and it was wonderful if you were selling a property, but a cause of anxiety for buyers and their representatives.
Jeff Appel, a loan consultant and sales manager at Citibank, confirmed that "we are seeing mortgage rates adjusted for inflation at all-time lows, and these rates are stimulating the market in New York City." Inventory in Manhattan is currently down approximately 22.5% and that certainly seems to be the case with one and two bedroom properties. Dennis Cusack, Sales Director at Town Residential explained that "entry level buyers are waking up and taking advantage of the low rates."
As a broker, I'm also seeing people with plenty of money financing as much as possible on their real estate deals and investing their cash in the stock market instead. Appel also points out that in Manhattan, "real income is not going up at the same rate as housing prices, so if not for these low rates, many people wouldn't be able to buy." This is really the key to the feeding frenzy in New York City.
Conversely, the rest of the country is not experiencing the same intensity as New York City. It seems that the same low mortgage rates are having a reverse effect everyplace other than New York. According to Appel, "low interest rates outside of New York City have created a paralysis -- the Fed has told us these rates will say in place until 2014 so there's no sense of urgency, and we have a huge disconnect inside and outside of New York."
Back in February, I wrote a piece for HuffPost called The Real Estate Super Tanker Is Turning. In Manhattan, the ship has definitely turned and is leaving a wake behind. For the rest of the country, there doesn't seem to be more than a ripple.