Peace and Joy from Keith, Zoey and Cheryl!

I hope everyone had a wonderful year, it seems like it just flew by! For buyers it was one of the most challenging markets I have ever participated in. What made it more difficult than 2005-2008 was the absolute lack of inventory coupled with rabid demand for property. High rents, cheap money, and the desire for ownership (putting some of your dollars into a "hard asset") were also major contributing factors. 

As we slide into 2015 we have noticed some thawing in the market with a much higher conversion rate from offer to contract. It is too early to determine if this is seasonality or a genuine easing. We were able to get about $10MM in contracts signed in November, though a large percentage of that was a sale at 290 West Street. Overall, our buyers had a very successful past few months. We were on quite a roll starting in August. As many buyers headed for the beach we kept our noses to the grindstone.The 2014 phenomenon of almost every listing ending up with a call for best and final is still going strong, however only for the best, most desirable properties. 

At the end of 2013 I predicted we would see a slowdown for 2014 but I was 100% incorrect as 2014 was one of the fiercest real estate bull markets I have witnessed in 28 years as a broker in NYC. Dare I express my thoughts again? Based on continued low rates, lack of inventory, the desire to own a piece of NYC real estate, and the fact that renting is no bargain, I think 2015 will continue to be a strong seller's market, barring any geopolitical/market black swans. 

When the financial markets came unglued in 2008 there was a lot of doom and gloom talk about NYC real estate. Hey, I was a bit gloomy myself! I started this company in 2007 to offer discounted rental commissions. I was advising clients to rent as the sales market was crashing all around us. NYC is not bulletproof to those kind of forces. What is really amazing is how short-lived the "crash" was!  We can now trace the bottom of the sales market to approximately February of 2009. If you were a brave soul and pulled the trigger on a purchase at that time, boy have you been rewarded...bravo! Quite frankly, even those that bought in 2011/2012 did exceptionally well.

So why didn't the NYC markets collapse under the weight of what many have called the "Great Recession", arguably one of the worst financial disasters since the depression.  We could cover a lot of ground here from the Fed, to fiat currency, well managed co-ops, QE etc..., I am just going to wax poetic on a theory I have based on my over 30 years as a resident of NYC and the changes that I have witnessed. I moved to the East Village in 1982 and went on to raise a family in Chelsea and the West Village a few years later. So here are a few thoughts:

The dynamics of the city have changed entirely since I moved to Norfolk street in 1982. During the 80's and much of the 90's very few people stayed in NYC long term, whether you were single or a couple you moved on after say, 5-7 years, very few people were here to put down roots and start a family. Now most buyers have a very long view. They plan to raise children or otherwise settle down and they don't want to spend 3 hours a day commuting to and from work. 

The city has become a much more user-friendly place since I arrived in 1982 (the film "Taxi Driver" provides a fairly accurate profile of life in the early 80's). At that time I would walk through Soho late at night to go see bands play at the Mudd Club which was located at 77 White Street. It was a bit scary, especially on the way home at who knows what time! Tribeca? It was an empty wasteland of small textile companies trying to hang on to an old way of life. The financial district? No one seriously considered living there, and the list goes on.

Like it or not, the great gentrification began with Mayor Giuliani and it was a slow process, like most big shifts in demographics. When Jeffrey's opened up on West 14th Street I thought they were crazy, Art Galleries in far west Chelsea? Condos asking $500 a square foot at 99 Jane Street...have they lost their minds?!?! My first apartment in 1982 at 188 Norfolk Street was $300 a month for about 1000 square feet and I had 2 roommates. My neighbors thought we were nuts to pay so much! I played music and paid the rent by selling silk screened shirts I made of punk bands to record stores in Washington Square Park (which was not so tidy at the time). Cars were literally burning on Avenue B and police were never seen in the neighborhood. 

So much has changed! It's a quantum leap from where we were. Those changes caused attitudes about living in NYC to change, evolving year after year until we arrived where we are now.If we go back to those days there will be more to worry about than the deflated price of your apartment. All this change has put a tremendous amount of pressure on the housing market, pushing buyers to the hinterlands of Brooklyn and Queens in search of affordable homes and creating dynamic new neighborhoods. All this while the long-time residents of these "new" neighborhoods grapple with the changes taking place. Many talked about "shadow inventory" or advised waiting until all the new developments come on line. StreetEasy was the sounding board for all things real estate, though today the boards are quiet as new condos in Tribeca fetch $2300 a square foot and inventory is paper thin. 

This is not to say that prices never go down. "Buy now or be priced out forever", I will never utter! Markets will always fluctuate. As JP Morgan once said when asked for advice on investing, "Markets go up, markets go down." But considering what we have been through, i.e, a terrorist attack that took down the World Trade Center, the unraveling of global financial markets in 2008, constant geopolitical pressures, the NYC real estate market has been quite resilient. It's not a terrible place to park some of your money, especially if you take the long view.

I just want to thank everyone who has given us an opportunity to work with you, whether you purchased a home with us or not. The response to our business model has just blown me away and I look forward to every day at work! We had another amazing year, even with such difficult conditions for buyers. As of today we are close to $50MM in sales yet again!

I want to wish you and all of your families a wonderful holiday season! 

Best, 

Keith, Christian and Lance

The Burkhardt Group

Contact:

Keith Burkhardt
The Burkhardt Group

917.770.4951

keith@theburkhardtgroup.com