It was an unprecedented year for most of us in New York real estate. All of a sudden, the mantra of “20-percent down or bust”–or even 10 percent down, for that matter–no longer applies, as mortgages can be had for as little as 3.5 percent down in certain neighborhoods. And when was the last time anyone could happily underbid on an asking price and expect to get the home of their dreams?

“It was a difficult year,” said the president of Halstead, speaking to Crain’s New York. It was “one of the weakest markets in decades,” reads a report released by CORE. The first half was the worst: “everything stopped,” told a managing director at Prudential Douglas Elliman to Crain’s. The second half fared better for sellers, in part spurred on by the then-expiring tax credit for first time buyers, which, for better or worse, was extended to April and even expanded. But new Freddie Mac and Fannie Mae regulations have made it more difficult for buyers–despite rockbottom mortgage rates to get in without a substantial nest egg. And while we ended the year up from the very bottom, not everyone’s convinced there won’t be a second dip in 2010. One thing is for sure, however–2009 has been a year of reassessment.

Jonathan Miller, of Miller Samuel Inc, points out in the Crain’s article that Manhattan inventory hit the decade’s peak in the first quarter, with 10,455 units–not counting the 7,000 or so estimated units in the shadow inventory, which developers aren’t actively marketing. Fannie and Freddie’s new lending requirements stopped covering anything less than 70-percent pre-sold, forcing some developers to consider alternate channels, such as the Federal Home Administration loan insurance program–which allowed buyers to put down as little as 3.5 percent–for the first time. Not everyone suffered–as pointed out on this blog, many cash buyers swooped in during the second half of the year, making life easier for everyone involved and speeding up signing the agreement to mere days. The foreclosures still hitting large-profile new and conversion projects all over the city are still going through, prompting many troubled assets to slash prices by up to 25 percent. Toward the end of the year, starting from September, inventories started going down, buyers did come back, and sellers, for the first time in over a year, could reasonably expect to receive their asking price reasonably being the operative word.

What 2010 holds for us is still uncertain, but the end-of-the-year reports coming out of major brokerages should give a clearer picture, both of the current market conditions and of the mood of the industry’ players entering 2010. Stay tuned–and Happy New Year’s.

With demand coming back , but credit, while cheap , still incredibly hard to come by, New York’s real estate brokers are seeing more and more buyers offering cash outright—and getting sweeter deals as a result, and faster, than mortgage-backed offers. The Real Deal found that brokers are now doing 40 to 100 percent of their deals in cash, a marked difference from the market’s peak in 2007. One real estate attorney, for example, said that only 20 percent of his clients paid cash in 2007—compared to 50 percent this year.

The trend is not only due to the difficulty of obtaining a loan, however: some sellers, according to the Real Deal, are willing to slash a further 5 percent off the asking price and to pick up transfer taxes to boot on cash deals. Furthermore, such deals can close within as little as 10 days, compared to the average two months when a mortgage needs to be arranged. According to the appraisal firm Miller Samuel, this is particularly true in the high-end market. Indeed, here at Elika, 75 percent of our clients have put down cash in 2009, including in a recent deal that Gea Elika closed at the Superior Ink building for $13.75 million. The low dollar value and the appeal of the New York City market, where prices are off 20 to 30 percent off their highs, have brought back investors and second-home buyers. New condos, which are particularly receptive to cash buyers since new rules from Fannie Mae and Freddie Mac requiring them to be 70 percent sold for suitors to qualify for loans, are becoming as a result mostly available to cash buyers only. A Tamarking property at 456 W. 19th St., for example, has all four of its sales in the 22-unit building go for cash since going on market a year ago. At One York in Tribeca, JANI Real Estate took four out of six deals in cash in 10 months.

The ascendancy of cash is not relegated to the luxury market, however: even school teachers are doing it, as are many middle-class buyers. Where does all the cash come from, considering the havoc wreaked on the economy in the last 18 months? According to a Prudential Douglas Elliman managing director, a lot of it has to do with people pulling out of the stock market, which, despite impressive gains, appears too volatile to many who weathered the storm of seeing their portfolios dwindle to 2000 levels. Furthermore, the drop in real estate prices has attracted many buyers willing to bet they are coming in at prices not seen in years now, even if these prices could fall further yet.

Finally, while the low interest rates mean cheaper mortgages, they also mean lower gains in savings account, making investment in real estate that more attractive comparatively. Some cash buyers, however, are apparently coming in expecting the moon, which developers are not always willing to deliver: while developers would avoid carrying costs, they can miss out on a city tax credit in the process. The sight of cash, though, still makes everyone more at ease.

Speaking at the Economic Club of New York, Federal Reserve Chairman Ben Bernanke said that, despite the falling value of the dollar, the U.S. central bank is likely to keep interest rates exceptionally low for an “extended period,” reiterating the same statement the Fed made back in December when short-term interest rates were originally cut close to zero. While the decline in the dollar has helped steer commodity prices higher, increasing the risk of inflation, Bernanke insisted that the Fed expects inflation to “remain subdued for some time.” There are also concerns that raising rates to prop up the dollar may hinder economic recovery.

The combo of low interest rates and a weak dollar bode well for the real estate market in New York, however, attracting buyers both local and foreign. The dollar has fallen 16 percent since March when investors went looking for safer vehicles. Bernanke said, “These safe haven flows have abated, and the dollar has accordingly retraced its gains.”

He added that the Fed is open to changing its policy to respond to significant changes in economic conditions, but that the country’s main challenges now are tight bank credit and high unemployment. In addition, he added that while recent evidence of an economic recovery may be attributable to the government stimulus, “continued growth next year is likely.”

The first-time home-buyer tax credit is due to expire at the end of the month, and it’s producing a frenzy. More data released by the National Association of Realtors on Friday shows the highest pending home sales level since December 2006, having already risen for eight consecutive months–the longest streak since the index came out in 2001–and the largest year-on-year jump in activity on record: compared to September 2008, the pending home sales index rose 21.2 percent this September.

Compared to August this year, the index rose 6.1 percent to 110.1 this September. It’s not all good news, of course: For one thing, the index actually fell in the Northeast month-to-month by two percent, although it’s still 16.9 percent higher than September 2008.

The biggest gains were in the West–10.2 percent–and the Midwest–8.1 percent. Analysts are also cautious about the expiration of the $8,000 first-time buyer tax credit, which many say will lead to yet another slump in sales activity, although many suspect that the credit may be extended to continue the government’s stimulus. However, the index is based on contracts signed in September, and there is a one- to two-month-long lag between a signed contract and a completed deals, so the index is inflated by an increasing number of short sales, which may not result in actual sales due to sellers walking away from unsatisfying appraisals, according to the Financial Times.

To cap the sour facts off, while resales jumped 9.4 percent in September, new home sales dropped for the first time in six months. That said, NAR chief economist Lawrence Yun said, “Home values will stabilize sooner rather than over-correcting. That, in turn, will mean wealth stabilization for the vast number of middle-class families and lay the foundation for a durable economic recovery.” Yun also estimates that 3 million renters are now “financially well-qualified to buy a median-priced home.”

The bit of bright news is that Congress is expected to move ahead with extending the credit, with some Representatives shooting for actually expanding the stimulus package by adding a further $6,500 credit for second-home buyers as long as they have resided in their previous home for at least five years, according to the Associated Press.

This week has wrapped up with a bang: following the S&P/Case-Schiller and the National Association of Realtors numbers released earlier Tide Turning, Condition Still Critical on a turnaround in New York house prices, as well as good news about the fall inventory The Fall Inventory: A Possible Return to Normalcy, more reports released today indicate Manhattan home sales rising 46 to 69 percent from second to third quarter, according to data analyzed by the Associated Press.

It seems buyers who sat out the first half of the year were finally emboldened to step in: sellers got 95 percent of their asking price in the third quarter, from 93 percent in the second quarter, according to Brown Harris Stevens and Halstead Property, and the number of unsold apartments on the market has dropped from a peak in April, according to StreetEasy.com. And while median prices in the third quarter fell 2 percent from the second quarter, ranging from $760,00 to $850,000, or down between 8 and 18 percent from last year, Prudential Douglas Elliman reported a 2 percent increase in the third quarter.

Analysts still caution against celebrating a bottom, however: 6,000 condos are ready to go on sale by developers wrapping up projects started during the boom, and the Nov. 30 expiration of the $8,000 first-time home-buyers credit will likely cool the buying spree, despite over a dozen bills introduced in Congress in an effort to extend the credit in some shape. Nonetheless, this should be a weekend to breathe a sigh of relief for the trampled but resilient New York real estate industry.