Einstein defined insanity as “doing the same thing over and over and expecting different results.”

Like weeds in a field- a Very, very expensive field

Are we doomed to repeat the mistakes, and insanity, of that time?
There are many, many little things that remind me of the New York City market of 2004-2008.

Reading articles about 3% down payments being revisited certainly gives me a little shudder.

New development sellouts are

occurring again, across all neighborhoods.

Even infomercials are appearing, claiming to help investors buy and flip homes in the Tri-State area; signs of the apocalypse we saw in 2008-2009 are around again.
But in tangible and intangible ways, the results of this boom are

quite different and should remain so, first demonstrated by the image I’ve included here, which inspired this post, of the supertall buildings across Manhattan.

And the fundamentals of the market seem to point to a sustained strength, rather than something fueled only by easy money.
The skyline of Manhattan will see these grassblade buildings, sticking up here and there, but I’m struck when I see construction everywhere, not just in Manhattan.

New development has found

its way into Long Island City, the Bronx, areas all across Brooklyn,

along the L

train, and beyond – and is creating

neighborhoods that didn’t exist 10 years ago, such as Hudson Yards and Hudson Square, and

the Far West Side in the low 60’s, neighborhoods that will mature and will endure.

There’s the self-proclaimed death of Williamsburg – that is, the end of being cool.

And the birth of Lower Manhattan as a proper living destination, cemented by the Fulton Transit Hub and the World Trade Center retail centers.
I don’t think I’m overstating when I write that we

are witnessing a once-in-a-generation building boom, one which will be spoken about in 80 years, just as we live with the crop of pre-war buildings built between 1924-1930.
The specter of rate increases seems further away, as many look to the end of 2015 rather than mid-year,

leaving

these 4% rates at least 50% below that of the last cycle.
Yes, demand for ultra luxury may have slowed a little bit, but we’re still seeing most of the current projects 70-80% sold out –

even 432 Park and One57.

To that point, buyers looking for amazing views actually have a real lack of options.

Even if they are willing to pay $5000-10,000 per square foot,

not much

opens up to see.
The appetite for apartments has not abated at most other price points, either.

Inventory remains historically low.

I’m seeing bidding wars even for one-bedroom apartments on the West Side. This is a new wrinkle, though there seems to be a good amount of one-bedroom inventory on the East Side.

Two-bedroom apartments below $1.5mm and 3-bedroom apartments below $3mm are

drawing incredible interest, though unrealistic pricing persists.

As $2000 per square foot settles in as a familiar

number regularly reached, and as the $3000-4000 per square foot is achieved for beautiful product, many buyers wonder where the “affordable” property will come from.

This is a real problem.
And here, too,

this cycle differs from

the earlier market,

when smaller apartments were more common.

Affordable land, a rarity these days, will become new rental property, in many cases.

When most (if not all) sellers who remained underwater on the East Side finally can sell, make themselves whole, and move to the also-competitive suburban houses,

some resale apartments should open up,

creating

a bit of

less-expensive inventory. These will be

more cooperative apartments than condominiums, though, and the process is

going to be pretty incremental.
To put it more generally, the sky isn’t falling.

Much has been written lately about this boom coming to an end, but it seems only that writing about smaller apartments is less sexy than private parking, 1000+ foot height, etc.
Sentiment about the market remains very positive, and some of the buyer fatigue I’ve been writing about over the past couple of months seems to be abating.
I would add a couple of

final thoughts.

First, inflation. Asset inflation, and

real estate in particular, has been here for many years, as fiscal policy with such cheap money has allowed anyone with lots of capital to plow into hard assets, and yet everyone is still wondering when broader inflation will take hold.

I’ve been wondering about this for 5 years.

It seems that we have at least a year before mortgage rates play a more active role in real estate.

But cheap money hasn’t equaled Easy Money, as it did.

Getting a mortgage remains difficult, and a wary buyer pool, albeit a qualified one, remains concerned with the fickle changes of FHA underwriting, which I’ve touched on in the past.

There seems to be a lot of room for lending standards to loosen, without creating the conditions we saw before the Great Recession.
This time of the year we’re still putting together a number of deals, many for buyers eager to get their searches over with and get into something where they perceive value.

Still, I’d encourage sellers to consider carefully

how they price their apartments as

they come to market.

Slightly lower pricing will encourage more buyers through the door, and often results in bidding wars.