Fearless Predictions for 2007

Dec 30, 2006

Manhattan Real Estate Predictions for 2007

Mirror Mirror on the wall, will Manhattan apartment prices soon begin to fall?. I say no. My fearless prediction: home prices in Manhattan will rise by 5% in 2007. Here are three reasons why:

(1) Record bonuses on Wall Street. The money has to go somewhere, and a good portion should end up in the real estate market. Moreover, prognosticators are predicting another strong year for the stock market in 2007.

(2) Interest rates starting to moderate. The slowing national economy will likely encourage the Federal Reserve to implement a rate decrease in the first quarter of 2007. Lower mortgage rates should motivate buyers who were sitting on the sidelines to get back in the game.

(3) More realistic sellers and buyers. Apartments sat on the market for a longer period of time in 2006, mainly due to the tug-of-war between sellers and buyers. Bolstered by the red-hot 2005 market, sellers overpriced their apartments and watched them gather dust. In the meantime, buyers kept waiting for price reductions that never happened. But, with buyers and sellers now more in sync, activity levels picked up considerably in the fourth quarter of 2006, and this momentum should carry over into 2007.

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