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Residential update: quicker sales, multiple buyers.

Certain sectors of the residential real estate market are finally making a bona fide recovery. Company wide, as of June 1, 1992, William B. May sales are up by 14.6 percent over 1991. Recently, one of our salespeople put together nine deals in under two months. Another had five closings within two months. Houses are perhaps the best sellers at this time, closely followed by larger prewar coops. While 1990 and '91 saw a greater number of single family houses being sold, this year, we have arranged sales for greater number of two-and three-family homes - their income factor affords buyers higher priced property.

One of the most telling signs of recovery is that we've had several cases of multiple (or back-up) buyers for the same property. This is in sharp contrast to just a year ago, when it was considered fortunate to have just one real buyer in hand. In the mid-'80's, multiple buyers drove up property values. Now, they simply help the properties get sold more quickly. Other signs of an improving market are significantly increased and more consistent traffic, deals being put together more quickly, less of a time lag between contract signing and closing, and an increase in the volume of closings. Our inventory, especially of brownstones and large coops and condos, is getting smaller, which means we'll soon be instituting a large-scale campaign to acquire new listings.

The primary cause of the real estate market's recovery in the early 80's was a reduction in the exorbitant interest rates. Buying once again became affordable. The market absolutely frenzied because there was plenty of available credit, an enormous pool of people in their prime buying years who simply wanted in, and market expectations based on projected, rather than inherent values.

The recovery of 1992, if we may already call it a recovery, is somewhat different. It is based more on the building up of consumer confidence. As the word spreads that some would-be-purchasers are losing their deals to buyers who acted faster, the market will build up more momentum. Overall though, it has been a sober, unfrenzied recovery, which is better in the long run.

People are beginning to feel safe about buying. They sense that prices will not continue to decline, having reached a realistic level which in many cases represents excellent value. Today's buyers are far more experienced than they were in the early and mid-80's. Those who haven't come of age, are at least very cautious. Buyers back in the market include many lawyers, doctors, financial service executives, as well as people in stable professions such as teaching.

There are other significant differences between this recovery and that of the early 80's. Then, people were buying homes as stepping stones on their way up. Each time they sold, they expected to make a killing. Now, buyers plan to hold on longer, and are buying less as an investment, and more as a home they will hold onto and live in for several years. Expectations of resales are more realistic and less speculative. As long as this remains the case, I believe the market will maintain its stability.
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Title Annotation:Review and Forecast, Section I
Author:Faulstick, Roberta L.
Publication:Real Estate Weekly
Date:Jun 24, 1992
Words:523
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