The market of two years ago, in which buyers and tenants could write their own tickets, is behind us. The rental market remains tight, and owners are not paying commissions any more. And the sales market is brisk and undersupplied. However, some buyers still have not fully accepted that they are no longer in control of the process.. Prices have adjusted to fit the new realities, and one of those realities is that high quality property in ANY size is scarce. So prices have firmed up and time on the market ratios are dropping.
I spoke this morning on the phone to the owner of a top London agency with whom we are considering an affiliation. She informed me that in London prices have mostly returned to their pre-Lehman highs, although volume is down. The situation in our market skews differently. Prices, especially towards the top of the market, are down considerably from their astronomical levels of three and four years ago. But elsewhere in the marketplace we are seeing price records set, mainly because of scarcity. The prewar buyer has little inventory to choose from. Buyers think our agents are kidding when they plan a tour of properties to show them and there are only three or four things to see. But there actually ARE only three or four things to see. And they are likely to be bought promptly if they are priced right. For us, there are buyers aplenty. Our ability to make deals depends on listings.
Today does NOT resemble 2006. Prices are not escalating madly (in most cases not escalating much at all.) No one is bidding 15 or 20% above an asking price. But as our sales volume increases, upward price pressure is reappearing in most parts of the market for 5 rooms and above, where inventory is limited.
So this is my message to buyers: don’t wait. For one thing, it may take a while to find what you want given the lack of high quality inventory. For another, the property you like may appeal to others as well and you may lose it if you are not ready to act. But most importantly, the sales market has returned to health. Now is the time to make you decision and move on with your life. There will most likely not be more for sale in six months. It will almost certainly not be cheaper. Carpe diem!