It is a widely held belief that wherever Wall Street goes, so goes the rest of the city. That is why the recent news that the Street could be headed for layoffs has real estate brokers worried. Sure, last week’s quarterly reports put Manhattan housing on the rebound, but the recovery could falter if the financial sector does, as annual bonuses play an outsize role in apartment purchases. High-end housing could be hit particularly hard, which is especially tough news given that the super-luxe market has been the slowest to bounce back, beginning its recovery only this year.
The Real Deal asked a bunch of brokers for their take on this bleak economic news, and the responses were almost uniformly dour:
How will the layoffs affect the volume of condo and co-op sales?
We will probably see a slight dip in the velocity of sales. — Shaun Osher, founder and CEO of Core
I think sales prices, which have stabilized, will remain flat while the quality product will be absorbed and the lesser product will have to be adjusted. — Barak Dunayer, president of Barak Realty
We have many buyers who seem to be expecting large bonuses in 2011 so we are expecting the first quarter to be very strong. — Sofia Falleroni, a sales associate at Brown Harris Stevens
At what point do you think we will actually see the effects in the market?
Immediately. The market is much more reactive now than ever before. — Osher
Wall Street bankers usually get their bonuses at the beginning of the year, so I think we will begin to feel the first tremors as we close out 2010 and we begin to get a sense of what the bonus picture will be. — Gary Malin, president of Citi Habitats
Any other thoughts on how they will affect the market in New York City?
[They] could slow down the recovery. The market is predominantly consumer confidence-based, and if buyers fear an extended recession, they will act conservatively. — Osher
Wall Street is a major driving force for our real estate market, and with the layoffs and hiring freezes, people are less motivated to make large purchase decisions. — Dunayer
Perhaps that is the problem, though, and not the solution. After all, if the financial sector continues to command 20 percent of all city salaries while only making up 4 percent of the workforce, it is bound to continue having a destabilizing effect on the rest of the city anytime the Dow gets jittery.