| The collapse of Bear Stearns has sent shockwaves | | | | Again, the psychological impact could be as great as |
| across the international economy. One of the five big | | | | the direct impact: As newspapers like the New York |
| New York investment firms, its demise has had a | | | | Times and other major NYC publications write articles |
| psychological effect on the economy perhaps greater | | | | in their real estate sections about the possibility of a |
| than its actual direct impact. | | | | "Bear Sterns discount," more and more buyers may |
| Its timing for the national economy is also particularly | | | | begin to wait for another six months before |
| bad: When the consensus has just developed that | | | | purchasing a home, and thus the self-fulfilling phase of |
| the economy is decidedly in a recession, all of a | | | | a recession kicks in. |
| sudden a major New York bank has vanished, making | | | | While very few people are excited by the prospect |
| what could be perceived as a mild recession look like | | | | of a recession, the prospect does hold out some |
| a possibly massive one. | | | | home for the New York apartment market: Prices |
| The same is even more true for the Manhattan real | | | | have grown so high that many middle-class potential |
| estate market. The city had started to just barely | | | | buyers have been priced out of even modest homes |
| noticeably tip in the direction of a seller's market | | | | in or close to Manhattan. While a recession would |
| from the balance that had existed as a sort of | | | | certainly be bad for the luxury market, the city as a |
| buyer-seller detente during the turn of the year. New | | | | whole may avert some of the extremely rapid |
| York apartments were by and large losing a little of | | | | gentrification that could end up damaging the city's |
| their value, though the market as a whole was being | | | | culture in the long run. |
| held up by a luxury market that has been perhaps | | | | Certainly, a significant recession would do terrible |
| the single strongest real estate market in the | | | | things to the Manhattan real estate market in the |
| country. | | | | short to medium term. However, it may also be the |
| Now, some worry that the collapse of Bear Stearns | | | | only thing that can bring on a correction to the real |
| and the resulting job loss in the financial sector could | | | | estate bubble that has so visibly effected the city's |
| lead to a significant reduction in the demand for | | | | demographics and development over the past |
| luxury Manhattan apartments. | | | | decade or so. |