Shock recedes into stubbornness.
This past month, a real estate broker advertised that he would dress up as the Incredible Hulk at a Sunday open house, hoping an appearance by the muscle-bound monster would lure buyers to his listing for a Midtown condo. He even went so far as to place signs around the unit warning that lowball offers would cause the Hulk to get angry.
The stunt may have been a joke, but the sentiment was real. This spring, despite a flurry of activity caused by bargain-hunting home-seekers, deals are still rare as buyers and sellers exhibit contradictory expectations.
"For every one seller who thinks pricing will be going up soon, I have 100 buyers telling me the opposite," said Paul Purcell, the co-founder of Charles Rutenberg Realty.
At the end of March, there were 11,028 available listings on the market, according to appraiser Jonathan Miller, president of Miller Samuel. That's a leap of 32.5 percent from 8,320 in the same month last year.
Manhattan market reports for the first quarter of 2009 produced more evidence of the market slowdown, as closed sales plummeted 50 percent in the first quarter from the same period last year, according to reports released by the city's major brokerages.
Sales in new developments fared even worse, dropping 67 percent from the prior-year quarter, the Corcoran Group's report said. Contract signings in the first quarter slipped 40 percent to 1,324, from 2,225 in the prior-year quarter, according to a report by Streeteasy.com.
Despite these figures, brokers throughout the industry reported that they are busier than before.
"What was a very dormant January, February and early March have been followed by a marked increase in buyer traffic, but not in actual sales," said Leigh Zaph, president of Manhattan Homes.
The shock of September's financial crisis seems to have faded into incredible stubbornness on both sides of the fence. Even as buyers become brasher and less willing to meet sellers' terms, many owners refuse to believe their homes won't fetch the same eyebrow-raising prices that similar apartments fetched last year.
"The average seller is still too reluctant to relinquish their inflated expectations set by the boom," said Jordan Tepper, the executive director of sales at Century 21 New York Metro. "Sellers are still citing recent sales by their neighbors, which reflect the boom market of '07 and '08, and subsequently alienating buyers and their new expectations."
For their part, buyers intent on getting a deal are increasingly unwilling to see sellers' points of view.
"Sellers are living in denial, and some buyers think they can make lowball offers on already reduced properties and get away with it," said Barak Dunayer, president of Barak Realty. "They are both ridiculous, and no one is making a deal."
The same applies to renters.
"The renters are thinking that the ball is in their court and are trying to negotiate everything in their favor," said Adina Azarian, founder and principal broker at rental firm Adina Equities. "I almost feel like tenants are trying to bully the landlords, and I don't like it."
It falls to brokers to bridge the gap between the two sides, which is becoming an increasingly time-consuming task.
Marie Yeljenic, a sales associate at DJK Residential, said she recently had one renter put in six different bids on six different apartments.
"I think the biggest frustration of brokers is working harder, showing more apartments, going to more open houses and doing few deals," she said. "There is very heavy negotiation and more time spent on every deal."
Brokers must convince buyers that their purchase is a good deal, a task that's harder than it sounds, since many buyers are convinced prices will continue to drop.
"Buyers are excited about the drop in prices, but remain concerned about when and where the bottom will be reached," said Zaph. "[They] understand there's been a substantial drop in prices but they don't know how to gauge these new values."
Deals are happening, brokers say, but only when sellers price their apartments at a significant discount.
"Those willing to price 20 to 30 percent below height-of-market comparables are meeting with swift action from buyers and going into contract briskly," Tepper said.
Here is what real estate pros had to say about market conditions:
Frances Katzen senior vice president, Prudential Douglas Elliman
The strongest part of the market is under $1 million, with 65 percent of transactions happening at this price point and only 2 percent transacting between the $2 to $3 million range.
Bob Eychner president, Eychner Associates
We are all devoting more time and attention to the principals in the deals. The measures we take are primarily extra hand-holding.
Albert Feinstein managing director and general counsel, BidOntheCity.com
The weakest part of the market is no one can accurately value current market offerings; there is too much turbulence in the market.
Marc Lewis president, Century 21 New York Metro
East and West Village, anything below 23rd Street, are slightly stronger than the Upper East or Upper West Sides. But generally all areas have excess rental inventory and a shrinking pool of tenants, which is rarely seen in the spring.
Rae Gilson vice president, Classic Marketing
Everyone has different reasons to buy a home now but they are all looking for the right price. When you compare apples to apples, you're going to buy the one that is priced better. Buyers are much more knowledgeable about the real estate market these days and it goes without saying that the weakest part of the market is overpriced inventory.