Luxury Real Estate

Courtesy of Frederick Peters, President of Warburg Realty

I had numerous phone conversations today with Warburg agents who are negotiating multi-million dollar deals (and a couple of multi-multi-million dollar deals.) In contemplating the strategies we discussed, I was struck by the uniqueness of the environment in which we New York City real estate agents are privileged to live. Three years after the nadir of the real estate crash and its attendant financial collapse, our high-end co-op market is healthy and vibrant, with multiple expressions of interest for many ultra expensive properties. And I am talking the co-op market, which by definition does not include foreign buyers. So this is (for the most part) home grown money.

Who are these buyers, and why are they acting this way? Let’s address part one of the question first, and let’s answer it backwards. Here’s who they are NOT: men and women with jobs at the big Wall Street firms. With bonus sizes plunging from last year, and cash compensation a negligible part of the bonuses, even the Wall Street hotshots are not getting paid anything resembling the fabulous sums which drove the markets in 2005, 2006, and 2007. We still see some private equity guys. And there is definitely a strong contingent of hedge funders - either the smart ones or the lucky ones, as so many of their brethren have gone out of business. We see some global manufacturers. We see real estate investors, and REIT owners. Actually, today’s high end buyers run the gamut of professions, EXCEPT that not so many of them work for large Wall Street firms.

As to why this market is so vibrant, I think there are several answers. First, good property is scarce. There is little new condominium inventory, and there are never too many large co-op apartments on the market. With local capital gains taxes at 27%, older people would often rather redecorate than move. So demand tends to exceed supply. Second, the local high end real estate market has recovered much if not all of its value over the past few years, bolstered in substantial part by the international money boosting condo sales. It looks increasingly attractive to home buyers exasperated by the unpredictable rapid cycling of the stock and bond markets. Real estate is, in the truest sense of the word, concrete.

And finally there is the sense of new beginning which always accompanies the purchase of a new home. As the economy slowly improves, those who can afford the luxury of change want to embody the return of (guarded) optimism with an investment in the future. New real estate always represents the possibility of new beginnings, of a clean slate. And who isn’t excited by that?

You can read more on www.warburgrealty.com/blog.

Courtesy of Frederick Peters, President of Warburg Realty

Life is a negotiation. Whether it is with our partner, our children, our extended families, or our co-workers, we are engaged in the give and take of negotiation every day. But the degree to which our personalities and engagement styles inform HOW we negotiate is something we rarely consider. Take me, for example. I have a big personality and a lot of opinions, but at heart I am much more bark than bite. I want everyone to be happy. I want consensus. So I have to be on guard all the time in my business life lest this desire to make people happy compel me to give away too much too soon.

Over the years I have both observed and participated in thousands of sales and rental negotiations. Here are a few things that I have learned about how personality shapes negotiation:

· You must figure out your own style and learn both how to use it and how to control it. For me, that has meant harnessing my enthusiasm in order to generate excitement and good will while at the same time knowing that much of the time I just need to shut up.

· In the same way, you have to be aware of the negotiating style of your customer or client (or broker, or partner, or boss, or mother). The CEO, who is always in a hurry and views every decision from 30,000 feet, needs accurate facts and an overview NOW. He will make a quick decision if you are on hand with what he needs. The CFO, on the other hand, may need to come back and measure everything a few times and will be extremely deliberate. He probably will NOT make a quick decision. And the scorched earth negotiator needs to be met, calmly, with the countervailing facts.

· Silence is golden. Biting your tongue will both stop you from giving too much away and at the same time create an environment in which your counterpart, for the same reason, may be tempted to over-speak. One cardinal rule of negotiation is that less is more when it comes to talking.

· If your clients or customers are a couple, watch THEIR interaction carefully. It will be up to you to understand how they make decisions, and it is rarely as straightforward as it appears at first. The talky one with the big opinions (in my marriage, ME!) is not necessarily the one whose desires will carry the day. Once again, silence is golden. If you stay quiet and observe, you can develop a perception of their negotiating style as a couple which will help you sort their priorities and make the right deal.

· It is NEVER strategic to lose your cool. Your frustration is your problem. Buyers and sellers can easily become emotionally involved in the transaction, so as agents it is our job not to let those emotions hijack the interaction. The best decisions are always made by cool heads. Maintaining a friendly professional demeanor will create good will no matter what your part in the deal. Having a tantrum will do the opposite. It is always your choice.

Managing a negotiation never involves just the price, the closing date, the terms. Managing a negotiation involves addressing all the subtle ways in which each participant either helps or hinders the issues and personalities to coalesce into a successful transaction. And the more conscious we all are of the psychological and stylistic issues which shape our responses, the more effective we are likely to be.

You can read more on www.warburgrealty.com/blog.

Courtesy of Frederick Peters, President of Warburg Realty

Yesterday evening I was engaged in a conversation with the composer Joan LaBarbara about the ways, good and bad, in which the Internet has opened the world of music to the general public. The Internet has also opened the world of listings to the general public. And this too is good and bad. Access to information has certainly created better informed consumers. But knowing the listings does not create expertise. The training, focus, and market knowledge possessed by the better real estate agents simply cannot be duplicated by the lay person. Nowhere is this more evident than in the preparation of the Board package. In her wonderfully funny new book about moving to New York, “The Last Blind Date”, Linda Yellin includes a full chapter on her co-op purchase experience. The Board process made NO sense to a Chicagoan like Linda, and frankly I think many New Yorkers, even those who think they know, really don’t understand just how time consuming and critical this piece of the puzzle can be. To make matters worse for squeamish prospective purchasers, established condos seem to be taking a page from the co-op playbook and requiring extensive Board packages themselves. So probably, if you as a buyer aren’t buying a townhouse or a condo offered by the sponsor, a Board package is in your future. So let’s open 2012 with a few tips for navigating the process:

· The Board package, when well executed should present a concise and comprehensive view of your life-familial, social, and financial. It should give the Board information about where you come from, what your interests are, what philanthropic endeavors occupy your time, what your kids are like-everything necessary to create a full picture.

· You will need to create a complete financial statement, along with back-up schedules and independent verification of all your assets. You will also need at least a couple of years of (probably complete) tax returns.

· The Blumberg form of co-op contract, which is used by most attorneys, only allows two weeks for Board package preparation. Take my word for it, this isn’t enough, especially when you include broker review. Make sure to get yourself three weeks rather than the two in the printed form.

· Really give some thought to who will write your social and business reference letters. These should be planned to include people who have known you a long time, people who know your kids, people who know your philanthropies; the letters should contain a full range of different perspectives. And please don’t you write them all or send the authors the same sample letter! It wastes a lot of everyone’s time if we have to go back to Square One with the letters because they are all written in the same font with the same salutation (a sure sign that the buyer wrote them all) or if they all contain the same middle paragraph ( a sure sign that the writers all received the same sample letter).

· About five days before the package is finally submitted, you will become so fed up with the process that it will actually seem sensible to you to a) assassinate your broker, b) move to a yurt in Outer Mongolia, or both. Don’t despair; this is the darkest hour before the dawn. And please don’t take it out on your agent either. Boards really ARE looking for all the details, clearly and sequentially presented. Remember, everyone you know who lives in a co-op has been through the same thing.

· Finally, when you are in the mood described in the bullet point above, do not say, or believe, that it is OK to hand in an incomplete package because “if they want more information they can come back and ask me for it.” Yes, they can, but often they won’t. They will just turn you down. It is far easier to provide all the detail the requirements, and your agent, ask for up front.

A Board package is time consuming, frustrating, and invasive. But it is the only way to end up with the co-op you want to live in. So take a deep breath, accept it, and work with your agent to make the process as painless as possible. No offense, but we really DO know more about this process than you do.

You can read more on www.warburgrealty.com/blog.

Courtesy of Frederick Peters, President of Warburg Realty

In New York, a slowing real estate market characterized the fourth quarter of 2011. Fewer purchasers at every level signed contracts than in the preceding three months, and the market retained the highly stratified characteristics which had marked it throughout the year. Co-ops at the lowest end of the market remained an extremely tough sell, while condos at the upper end continued in popularity, especially with foreign buyers.

The marquee sale of Sanford Weill's penthouse at 15 CPW for $88 million was a particular highlight of the fourth quarter. While unique at $13,000 per foot, the sale was emblematic of the willingness on the part of foreigners, particularly those from the former Soviet Union, to spend extraordinary amounts of money the world over for trophy properties. All over Manhattan, foreign buyers, especially from Russia, Asia and South America, have driven new condo prices up as they use our real estate as a safe haven for their capital. The lower priced properties, frequently in multiples, are the preferred purchase of Asian investors. The high profile, high price units are more often purchased by South American or Russian nationals, likely as pied-a-terre apartments for use a few times per year.

In addition to serving as investment vehicles for investors from around the world, sales continued briskly in the one to three bedroom new condo markets all over town. The fourth quarter saw continued healthy absorption in Harlem and Williamsburg, in Chelsea and the Madison Park area, with a mix of users, investors, and parents purchasing for kids writing the checks. While the pace slowed from earlier in the year, it continued strongly enough to further whittle down the inventory overhang from what appeared to be overbuilding a few years back. Now that these units are getting absorbed, however, an inventory shortage seems more likely to afflict us than an overhang. And for the first time in several years, eager buyers are buying new condos from plans; the Toll Brothers building on 65th and Lexington is almost sold out although the infrastructure has only reached about the eighth floor.

The co-op market, meanwhile, was subject to a highly different set of forces. Without the boost of foreign capital, the mood remained cautious. Among properties costing $5 million and up, scarcity dictated the terms of the market; with so little available, well priced properties in excellent condition were still attracting multiple offers. But with an uncertain economy, the prospect of shrunken Wall Street bonuses, and a country paralyzed by political bickering, the fourth quarter was a time for caution. No one wanted to go too far out on a limb. So even larger co-ops had to be priced exactly right if they were to sell. Buyers were not stretching. They once again liked real estate as an alternative to the zero-sum roller coaster of the stock market, but only at the right price. As for the older condos, they are increasingly indistinguishable from co-ops; their Boards are demanding more and more information, both financial and personal, in the Board packages, and just waiting out the buyers who won’t supply it. Sooner or later, most of those buyers just throw up their hands and walk away.

In the $2 million to $5 million market, the same realities applied. There was less multiple bidding during the last few months of the year than there had been earlier, but even in the multiple bid situations which DID arise, the properties had to be well priced and in great condition. And then the bids rarely went much, if at all, above the asking price. And as the co-ops got smaller, the inventory got larger. The studio and one bedroom markets, especially in the postwar buildings which line the eastern avenues of the East Side from 96th Street down to 14th Street, are still available in quantity and absorption continues to be slow. One of the events to watch for in 2012 will be the tipping point between the undersupplied rental market and the saturated sales market: at what point do those one and two bedroom renters get their increase notices and say, “For this money it would make more sense for me to own”?

2011 was a year in which the complex realities of the newly global economy were felt in every corner of the world. It was a year of market unpredictability during which, on the whole, our New York real estate market was in balance. Buyers and sellers remained largely within their comfort zones, and deals were negotiated aggressively but fairly on both sides. There were some unexpected peaks, like the spring mini-boom, and some unexpected valleys, like the winter doldrums which began the year. But overall well priced properties sold at fair prices to satisfied buyers. We like to think of this as a broker’s market, in which our contribution as brokers in educating both sides and bringing them together seems particularly concrete. We look forward to more of the same in the year ahead.

For up to the minute information, please visit the Warburg Blog.

Courtesy of Frederick Peters, President of Warburg Realty 

Recently I got a request from The Real Deal Magazine to articulate my predictions for the New York market in 2012. I have done this for them every year for the last three or four, and it is always fun to compare what I said to the realities as the year winds down. So far my educated guesses have been pretty good; let’s see if I can keep my record up for 2012. My overall belief is that 2012 will in many significant respects resemble 2011. I expect the Manhattan market to continue to demonstrate the same highly stratified and uncertain behavior which defined last year. More specifically:

· We should anticipate big swings in confidence and therefore in sales and rental activity. I believe that the economy will continue to show gradual signs of improvement, but that volatility in the markets will increase in the months leading up to the election.

· We will see continuing capital flight from the BRIC (Brazil, Russia, India, China) countries. These ultra wealthy buyers will bolster the mid and upper ends of the condo market. There is already heavy demand for the new Extell building opposite Carnegie Hall, One FiftySeven, with many prices hovering around the $10,000 per foot mark. And those prices are going up!

· There will be continued emphasis on turnkey condition to bring in top prices. During 2011 most of the really big prices, on a per square foot basis, were paid for either newly constructed property or that which had been completely redone. Most buyers simply don’t want to add the uncertainty of renovation to the considerable list of uncertainties we already face in the current environment.

· The top end of the market will continue to be active in 2012. We can anticipate a steady stream of deals in the $10 million-and-up category, encompassing town house, co-op and condo transactions. And don’t expect all the purchasers to come from the finance and hedge fund industries! As in 2011, most bankers are receiving a lot of non-cash, future-oriented compensation, and many of the hedge funds did not weather the recent economic storm so easily. Look for lawyers, real estate investors, and entrepreneurs from all over the country, as well as the world, to be staking a claim to the Big Apple.

· It seems certain that many apartments, especially in the older condos and in co-ops, will continue to linger for months on the market as their sellers try to find an appropriate price. The current environment is filled with mixed signals, which sellers AND brokers can easily misread. Conservative pricing is any seller’s surest way to quick action, but sellers are usually reluctant to price conservatively because they fear leaving money on the table. Hard scrutiny of the comps, and of the assets and deficits of the subject property, will be critical to sales success in 2012.

· I don’t see the rental market loosening up much in the new year. Everything for rent is expensive and vacancy rates remain at their lowest level in years. Perhaps the ongoing constriction in the rental market will lead to an uptick in the sales of smaller units, which seem increasingly attractive on an after tax monthly payment basis as rents continue to rise. Of course, this brings first time buyers and their families up against the increasingly demanding co-op and condo Boards, which may demand six months, a year, even five years of maintenance in escrow for neophyte purchasers. A choice between Scylla and Charybdis…

So that, in a nutshell, is my overview on how I think our market will play out over the next six to twelve months. I am going to tuck this away and see how close I was when December of 2012 comes around!

You can read more on www.warburgrealty.com/blog.

Courtesy of Frederick Peters, President of Warburg Realty

The end of the year is always a time for reflection. Here is my list of some of the events and issues which made a real impression on me or our business in 2011:

1. Unbelievable real estate purchases, primarily by Russian oligarchs. These included the $40 million sale of a 4,000 square foot apartment at 15 Central Park West to Taiwanese tycoon Min Kao; the approximately $88 million pending sale of Sandy Weill’s 6,000 square foot apartment in another part of the same building to 20-something Russian fertilizer heiress Yekaterina Rybolovleva and her father Dmitry; and the $220 million sale of the penthouse at One Hyde Park, in London, purchased by Ukrainian billionaire Rinat Akhmetov. This provided an interesting context to one of the year’s great ongoing soap operas, the London litigation between Russians Roman Abramovich and Boris Berezovsky, which has provided a fascinating and appalling look into just how some of those fortunes were made.

2. The freak October snowstorm. Central Park was devastated by the loss of tree limbs as a result of the huge snowfall on trees which has not yet lost their leaves. A tragedy for all New Yorkers who depend on the beauty of the Park to keep us sane!

3. The Euro meltdown. The United States, a nation of immigrants, had been banded together for over a century before we attempted a Federal income tax, which is still contentious a century later! How could anyone expect that the Eurozone countries, which have been at war with each other on and off for millennia and have such distinct and antipathetical cultural identities, would band together and bail each other out easily when the economic lifting got heavy. We certainly have not seen the last chapter on this one.

4. China. Their manufacturing economy slowed. Their high handed internal governance is provoking more and more pushback from an increasingly informed and prosperous populace. They are our major bondholder. And they have a major appetite for New York City condominiums though not, like the Russians, of the $40 million variety. They prefer prices under $2 million, and they may buy several. We have learned that you may have to go to them, but their interest in investing in our coastal cities is as vast as their country.

5. Landmarked districts in New York City. A great idea gone a little awry. No one believes more than I in the preservation of our city’s diverse and gorgeous architectural heritage. But when sweeping districts begin to include gas stations and tenement buildings, something is not right. The population of our city is growing and we will continue to need sites for development. It is fair neither to the owners of the real estate nor the potential users of the more effectively deployed sites to bar them from development when there is no possible reason to preserve them.

6. Shadow inventory. There was a lot of talk a few years back about how all the condo inventory available in the city when the recession began would hang over the real estate market for years to come. It was always my feeling that absorption would bounce back and the big issue for us would be LACK of supply, not oversupply. And here we are! Buyers are snapping up that “shadow inventory” all over town, while the few new projects under construction, like Toll Brothers’ new building on 65th and Lexington, are selling briskly from plans while the buildings are still a year away from completion!

There’s more…but those are today’s highlights. With that I am signing off till 2012, and wishing all of my readers a wonderful holiday season!

You can read more on www.warburgrealty.com/blog.

Courtesy of Frederick Peters, President of Warburg Realty

Over the last fifteen years, all our lives have been revolutionized by technology in ways we could not even have imagined when the Internet (or World Wide Web as it was known in those days) first came onto the horizon. Business has been profoundly transformed by the transparency inherent in full access for everyone to information about anything. We have had to keep up, as best we could, as change races ahead of us. We are challenged by change not only to stay current but also to sort through its myriad directions and promises to determine what we believe in, what works for us. In other words, one of the greatest challenges of the new millennium has been to embrace change without sacrificing our identities to it. This process, every day and every week, profoundly engages me, my agents and staff.

How do you redefine yourself while remaining true to the values which you most believe in? I think each of us has a different answer, but I can tell you mine, and with it the vision I embrace for Warburg.

First, I believe you have to build on the bedrock of who you are and what you know your values to be. More than anything else I want Warburg to be a values based company. I want us to be known for doing not only the smart thing, but also the right thing. I want us to believe in and support each other, to believe that a success for each of us is a success for us all. And I want us all to remember that, although we are here to make money, money is not always the most important thing. Pride in ourselves and what we represent, in our companies and our communities, both bring success and enable us to savor it.

Second, I believe that we need to embrace the future while honoring the past. We have an extraordinary history as a company going back almost 120 years; each of us should be proud to be a carrier of that tradition and to embrace what remains best about it. At the same time, we need to understand that some traditions need updating. Print ads gave way to online ads, phone appointments to e-mail appointments, cocktail parties to Facebook. Who today can imagine not having a BlackBerry or an iPhone? In three years everyone will feel the same way about tablets. An e-blast reaches more people in seconds than a mailing could in days or weeks. Blogs define the writer as an expert, a go-to person, in a way that has no precedent in the pre-Web 2.0 era. So we need to be thinking, not “how have I done up until now?” but “how do I see my place in the future, and what steps do I need to take to realize that vision?” Our only successful direction is forward.

Finally, I believe every one of us has a role to play. The vast majority of you will not have your names read this year as having been one of the top earners in your office. So I would like to address this third category to you. There are many ways to be a significant member of our Warburg family. Perhaps you are a great recruiter, spreading the word about what a terrific place Warburg is to work (believe me, we need as many of YOU as possible.) Perhaps you always have great ideas about listings when your colleagues are trying to figure out what to show. Maybe you just brighten everyone’s day a little by saying hello. While we are a business, and we need to function like a business, we are also a little world, and it takes all kinds of skills and personalities to make that world go around. So I honor you all, those who have made a million dollars and those who have not, those of you whose careers are ramping up and those of you who may be slowing down – you are all threads in the fabric of Warburg’s vibrant, evolving tapestry and you have my deep gratitude and respect.

You can read more on www.warburgrealty.com/blog.

Courtesy of Frederick Peters, President of Warburg Realty

As I have mentioned before in these blogs, Thanksgiving is my favorite holiday. Last week 30 of our closest family and friends gathered at the house in Connecticut to eat, drink, commune, and play with the tiny members of the fourth generation. As we do every year, we went around the table offering each guest the opportunity to express what they are thankful for.

Here is my professional gratitude list:

· I am thankful that the United States, for all their differences, are still fundamentally united. I am grateful that my tax dollars can be used to support education programs in New Mexico, or provide food to children in Missouri. Would the European Union be in its current critical state if France and Germany felt that way about the poor in Greece?

· I am thankful that New York City remains enough of an international center to retain a vibrant residential real estate market. International buyers and wealthy non-Wall Streeters buoyed Warburg’s success this year, as did a record number of $15-million-plus home sales.

· I am thankful that every day of my life here, there is a fascinating museum exhibit to see, a beautiful concert to hear, a transformative reading to attend, a wonderful friend to meet. It is a privilege to sell the city and the unique lifestyle it offers.

· I am thankful that the transparency ushered in by the Internet has redefined the way residential brokers do business. With information so readily available, we have had to create a new value proposition which depends on expertise, and in the process make ourselves more conscious of what services we provide to consumers.

· I am thankful for the high level of professionalism in most of the colleagues with whom I interact. That said, I would be even MORE thankful if New York State raised the bar on its requirements for real estate licensees. It is just too easy for anyone to get a license in this state. Ours is a complex and profoundly important job and the barriers for entry here are just too low.

· I am thankful for the transformative power of social media, which allows me and the company to reach so many with this blog, through Facebook and Linked In, or on Warburg’s Twitter account. I love the way the notion of advertising which was prevalent when I came into the market 30 years ago has been incorporated into the far larger and more embracing concept of viral marketing.

Above all, I am thankful for change. The way we sell, the way we disseminate information, the way we interact with each other – all of it has evolved SO much in the last ten years; can we even imagine a business world without e-mail today? Although I often resist it, and resent it, the rapidly altering landscape of the post-technological world has kept me on my toes, both frustrated and exhilarated as I strive to integrate apps and links and SEO into Warburg’s overall strategy, while maintaining our fundamental values of integrity and strong interpersonal interaction which make our organization flourish. After twenty years, running a business is still a voyage of discovery. And I still love the view from the prow of the ship. 

You can read more on www.warburgrealty.com/blog.

Courtesy of Frederick Peters, President of Warburg Realty

Last week The Real Deal held its annual forum at Avery Fisher Hall. I found myself in the surprising position of debating Lockhart Steele, the founder of curbed.com, on the topic of whether social media is good or bad for real estate. In theory, I was debating on the “bad” side, which, considering that I am both a blogger (quod erat demonstrandum) and a big Facebook fan, seems ironic. Nonetheless, there are a number of things about the media in 2011 which frustrate me, and I made those the focus of my debating points.

Here, in somewhat random order, they are:

1. I really hate the anonymous comments. Lockhart argues that the comments are an integral part of blog sites, and that they both expand and enrich the discussion. I get that, but why do they have to be anonymous? In my experience, not needing to identify yourself leads to egregious breaches of even the most basic politeness or relevance. A business story turns into a trashfest; respect-worthy individuals have irrelevant and off color sexual innuendo thrown at them, all because the writer doesn’t need to sign his/her name. My feeling is, have the courage to identify yourself or don’t participate!

2. The Internet has enlarged, facilitated, and diminished reporting, all at the same time.

· Enlarged, in that the vast database resources of the world are available at a keystroke, so creating connectivity between regions, ideas, and people is easier than ever.

· Facilitated because the sort of shoe leather reporting which was still the norm early in my career has mostly become obsolete. It’s easy to get the information you need.

· Diminished, for exactly the same reason: it is TOO easy to get the information you need. During the early years of my career, the reporters who covered real estate knew the business cold. They had done lots of research, cultivated sources, done analysis in order to draw conclusions based on facts. I see less and less of that today. With few exceptions, reporters DON’T tend to know the business cold any more, and they somehow mistake data representation for reporting.

· I was struck recently by the similarity between a good reporter’s work and that of a skilled agent. The Internet provides both (and both their audiences as well) with access to information. What separates excellence from mediocrity is the ability to make distinctions, draw conclusions, bring the data to life in a way which illuminates and contextualizes that information for the benefit of the user. Analysis, a balanced perspective giving both sides of the equation: these old fashioned virtues are increasingly hard to come by.

3. I spoke at the forum about the “Kardashianization” of residential real estate reporting. Residential real estate is the biggest asset many Americans own. Why then is it increasingly covered like “soft” news? Why is it more about bold faced names, decorating, and amenities than about the significant business trends on which the markets rise and fall? I suppose I am as interested as the next person in where Snooki’s hideaway is (on second thought, maybe not) or the distress caused by bedbugs, but can anyone imagine commercial real estate being covered this way!?

I don’t ask for much. I want blog commenters to have the courage to identify themselves. I want to deal with reporters who know my industry and actually analyze data to arrive at conclusions. And I want to read more about the complex trends which drive our market and less about Gaga’s new loft. OK?

You can read more on www.warburgrealty.com/blog.

Courtesy of Frederick Peters, President of Warburg Realty

Over the weekend the New York Times revealed a profoundly interesting trend: last year, for the first time in decades, more people moved INTO the city than out of it.

What I found amusing about the article was the disjunction between those interviewed about why they stayed in (or returned to) New York and the statements from the talking heads who were asked to opine about the trend overall. While the actual people said their decision to remain or come back to New York was all about the quality of life, the demographer from the Brookings Institute seemed to think it was all about the inability of people to sell their homes. Speaking for myself, I don’t buy that line of reasoning.

Don’t get me wrong; we as real estate agents understand as well as anyone how hard it can be for some consumers to sell their properties in the current environment. But is that really the factor most profoundly impeding an exodus from the city? I don’t think so. The fact is, in most of the city as a whole there is a marketplace. Properties will sell. They may not sell at the numbers sellers hope to achieve, but if these same sellers are planning a move to other parts of the country, where the markets are often far more depressed than they are here, they will still get plenty of bang for their buck. I truly believe that the reduction in people leaving New York, especially to move to the suburbs, is less about home value than about satisfaction and convenience. As I have noted in this blog before, the notion of suburban/commuter life was built around two realities of ‘50’s and ‘60’s life: the 9 to 5 workday and the one-working-parent family. In today’s world in which both members of the couple work ten hours a day, who wants to add two train rides to those already long hours? And for those with kids, when do you see them?

What about the people moving INTO the city? As the article notes, many who leave are drawn back. They find they miss the energy, the vitality, and the it’s-11 PM-the-night-is-young-what-shall-we-do-now sense of endless possibility. Young people are drawn here in huge numbers simply because the city is so exciting and (relatively speaking in this very challenging economic environment) replete with opportunity. It seems that, more than ever, people are drawn to New York not only from all over the world but also from all over the country. Of course, some of this is to be expected. We all know that globally populations are tending increasingly to gravitate away from rural and towards urban environments . And with 7 BILLION people now in the world, it also seems inevitable that there will simply be more people in all of the world’s cities as time goes by.

That said, so many converts to our city arrive like the dazzled Dorothy Gale to Oz, murmuring “Toto, I don’t think we’re in Kansas anymore.” No Dorothy, you’re not, and probably, based on the data, you won’t be going back there any time soon.

Read The New York Times article here:

http://www.nytimes.com/2011/11/12/nyregion/in-shift-more-people-move-in-to-new-york-than-out.html?_r=1

You can read more on www.warburgrealty.com/blog