The question I am thinking about is this:
What will drive the Real Estate Market more, strong employment, or better bonus season?

Conversely, will weak employment and a down bonus season destroy

any RE market momentum we have here?

I would argue that a search for Value in the market, with many finding it, seems to have created a more stable situation, despite what could be less rosy news over the next quarter.

We wear many hats

much more dire layoff numbers than what I am seeing in print.

3000 worldwide layoffs for Citibank

sounds much better than 20,000 or 30,000 worldwide layoffs.

Sure, layoffs have an impact.

But dire predictions have not materialized.

Will they happen in 1st quarter 2012?

Will the super committee reach consensus

in

Washington?

We will have to wait and see.

Will bonuses be down 20% this year?

So what if people do make slightly less in 2011 than in 2010?

My read, from working with a number of buyers in the market right now, is that 2008-2009 changed the mindset for many, but is not keeping buyers away from making real estate decisions.

Surely, people have become even more conservative in their outlook than before.

But if they have been renting in New York, and have a need to get a larger apartment, despite a looming lackluster bonus season, rents appear really high.

The calculation is then just about how long someone is going to live in the city, desire to take advantage of tax deductions, desire to have a hard asset, what have you.

I am fond of marathon metaphors, since I do a lot of running.

A friend of mine told me, “Don’t make any big decisions on the uphills, or the downhills.”

Applying that to this real estate market, I do not see anything overheated, other than the rental market, nor do I see major disaster ahead.

I just see an opportunity for buyers to take a little more time, assess their options, and make a rational decision.

My sales experience tells me that most people do make a purchase decision with their emotions, and then back it up with facts.

Fine.

But perhaps the emotion these days is tempered with a little more patience.
So let’s call this combination a new normal, a search for Value.

This

overarching criterion, Value,

is being applied by many, many more primary home buyers – and not just investors.

Value is playing a bigger role across the board.

Value could be the $2mm Three-bedroom, or it could be the $999,000 2-bedroom, or is could be the $4mm Four-Bedroom.

And buyers are finding it.

A casual search across any Real Estate

website these days will reveal many more

property descriptions touting “Value” rather than

“Luxury.”

Doormen, gyms,

etc may

seems like luxuries to those who

do not live in Manhattan, but

of course

value is a matter of

perspective.

Wherever a buyer is across the spectrum, I would argue that value, rather than luxury, has become the new emotional decision.

Value is exciting, value helps you sleep at night, and yet value is boring and thoughtful and lasts over time.

Of course, I’ve been

having a little Occupy Wall Street-themed blog entry fun over the last few days, interested to see what happens today downtown with marches and such.

Meanwhile, many hardworking New Yorkers are happy to have jobs, wherever they are.

They like living in Manhattan, Brooklyn, and Queens (though I don’t work in Queens, Bronx, or Staten Island, I do hear these things…).

Yes, at the

high end

of the market, we are seeing new listing records,

$88mm apartments, $90mm townhouses, what have you.

Five sales deals over $20mm last quarter is significant.

But

what we can

categorize more as the rest of the market, which we can call the 99%, ha ha- is how Real Estate Market Transaction Volume is driven by jobs

or bonues.

How

many people are fearful they will lose their jobs here?

While I am not seeing it in the news, I feel that

mid-level positions

at banks

to be most at risk.

Yes,

new hires are making lower bonuses, are happy to have jobs, and cost the banks less- and they will drive the rental market.

New attorneys will perhaps make lower first year salaries as pushbank on hourly rates continue.

Looking more broadly,

disruptive business ideas

and new technology

continue to destroy certain job sectors and open competition worldwide.

But does that mean the market will give back the 31,400 jobs it added over the last 12 months?

That is hard to say.

I don’t see it happening.
The biggest culprit with any job losses we may see, or lack of hiring in New York City or anywhere in the United States,

is not banks themselves, probably not any specific industry or evil empire.

The blame is uncertainty.

Too many unknowns will keep companies from hiring.

How this may translate into the market seems be more steady volume and price stabilization as buyers search and find value, without any major price increases.

4th quarter volume may ultimately

be slightly down, but it is so much stronger than 2009 and on par with 2010 (volume up 1%).

I actually see some stability emerging in the new year in our market.

I

want to believe that a better-than-expected job situation, even with some layoffs, will be a net positive for the market here, and I do not think a down bonus season will be a disaster.

We could see a tiny bit of softening in the $4-8mm range, but I actually don’t think we’ll see it.

Think about it- Where these properties are priced today, many of these are value

propositions for buyers who want to stay in New York City and need 4+ bedroom apartments.

The “bread and butter” sales volume may actually pick up a little bit 1st quarter, but for now let’s enjoy some turkey, and wait and see.
-S