Well, I think you see that in the volume of sales, which is down. But nobody was giving anything away. I mean, this is New York; typically values don’t just drop overnight like they do in the stock market. What I have explained to a lot of people is that a rising tide carries everyone with it, so any apartment—regardless of quality or even location—was dragged along in this great real estate upswing. Today, every property has to stand on its own, and the less attractive apartments are no longer going to benefit from this upswing in real estate, and that is where you will see prices really start to come down.
Do you have a timetable for when this might happen?
I think you are going to see some softening in the next quarter, in the fourth-quarter reports. There has already been some, if you look quarter over quarter. But remember, there are so many trophy apartments that closed this year, and this has really pushed the average sales price up. Everyone talks about 15 CPW and the Plaza, and there were lots and lots of deals above $10 million that have really driven up the average sales price. It was a record-setting year for that; 2007 and 2008 were huge years for these super-luxury apartments, and we won’t see that volume of sales above $10 million in 2009 that we have seen in the past. The mix of apartments will switch, and that will pull the average price down.
What do you think will happen in the luxury market?
I think that market will still do very well. The brokers who work that end of the market are all saying that there is a lack of really good inventory, but no shortage of clients who would happily write that $20 million check. They just can’t find anything to buy. So a great number of luxury properties will still trade, but we don’t tend to see more than a handful at a time; 15 CPW, the Plaza and 995 Fifth being on the market at the same time was very unusual. I think if the product is there, the prices will remain strong and the buyers will be there.
As someone involved in the real estate industry, what do you make of how the press is reporting on the economy and real estate right now? Is the press a problem?
It’s not a help, that’s for sure. The problem with the press is that they like to report negative stories. I remember after 9/11 when the press was jumping on stories about people running from the city and fleeing to the suburbs—New York was over, Tribeca was over. And it simply wasn’t true. After 9/11, the city’s real estate market stood still for about four weeks and then it just took off.
I was doing a story with a reporter from The New York Times about how many sales we were doing, and I had to actually bring her up to my office and show her the files in my computer and show her the positive trends that were going on in the real estate market. It’s very easy to get depressed, believe the negative and overlook the positive. Nobody wants to read good news.
Is the press missing anything?
I think they are missing that it is a great opportunity for buyers to get in there, although some people are writing about it. I just think that the press has been talking about a real estate bubble for years now, and we are just now starting to see some softness in New York, and they are just piling it on.