Not Drowning But Wavering.

(with apologies to Stevie Smith)

A reader asks, "What's going on with the high-end market?" Our last two posts have been about low-end activity but that question remains: What IS happening with the high-end market?

Not a whole lot.

In recent years Manhattan Homes Inc. has predominantly served this segment of the market, helping buyers and sellers in the $3-5 million plus price range. Now, we have an unusual situation brewing: as far as we can tell the lack of "movement" has not been obligatory but rather by choice. This is true of both buyers and sellers.

For those of you familiar with the approval process practiced by co-op boards in NYC (and please note: co-op apartments account for around 75% of all residential ownership), included with each purchaser's "application" is a full disclosure of their financial status. As the broker, we see income, assets and liabilities, and though this information must remain confidential, we can say our observations at these price levels have rarely revealed circumstances even remotely approaching "borderline". The buyers have been cash rich, income rich and their debt to income ratios have usually been at 15% or lower. Even if we were to assume these buyers' investment portfolios dropped 50%, their buying power has remained within acceptable limits. Their decision not to buy is exactly that: a decision, and not a necessity. Right now, many a buyer wants something new but can't bring themselves to do anything about it, or their thoughts go back and forth between wanting to do so and not wanting to do so. As for the sellers, their profile is similar. Whatever losses they've suffered have not threatened their ability to hold on to what they've got, and they, too, have simply withdrawn from the market--for now.

Of course, there are exceptions. Clearly, victims of the Madoff debacle who were fully invested with him have been truly devastated and have been compelled to sell, or are no longer viable buyers. Also, individuals or families with single wage earners who have been laid off or "shown the door" are vulnerable, too. But these situations along with a few others of similar effect represent a small minority.

What is going to happen? Recovery--and this could happen sooner than many think. There are several variables that affect a bad economy and some have fixed life spans that can influence the speed of fiscal convalescence, but two--the situation described above and the decision by banks to lend or not lend (the money's there folks)--can legitimately be described as a simple switch that can be toggled at anytime, and a good thing.

--Leigh Zaph. (any comments can be emailed to us at, thanks).