Real estate is seeing mixed signals from several reports that came out this week regarding the health of the market. A bumpy ride is certain, but how bumpy, and how long?

On the one hand, the National Association of Realtors’ pending home sales index for contracts signed in November fell 16 percent from October. Alarmingly, the index dropped highest, 25.7 percent in the Northeast, on par with Midwest. In the Northeast it’s still 14/7 percent above November 2008 levels. On the other hand, that’s 15.5 percent higher than November 2008, prompting NAR’s chief economist Lawrence Yun to say that “the market has gained sufficient momentum on its own.” Yun predicts another surge in the spring, as buyers again rush to take advantage of the tax credit, which which was extended to April. According to NAR, in addition to the 2 million people that have already used the credit, another 900,000 first-timers are expected to qualify, as well as 1.5 million repeat buyers.

Yun also offered that “mortgage interest rates cannot remain at rock-bottom levels for a sustained period and will likely inch higher in 2010.” But just two days later, on January 7, Freddie Mac revealed in its weekly survey that the 30-year fixed-rate averaged 5.09 percent for the week, down from the 5.14 percent of the preceding week. Fifteen-year averaged 4.5 percent, down from 4.54 percent the week prior. FIve-year Treasury-indexed hybrid adjustable-rate mortgages remained unchanged, however, at 4.44 percent. One-year Treasury-indexed ARMs were down to 4.31 percent from 4.33 percent. Yun, of course, is almost certainly right in the long-term, as the Federal Reserve is likely to raise its overnight rate in 2010–but Freddie Mac’s chief economist warned that no Fed action is likely until the second half of the year.

Meanwhile, the Mortgage Bankers Association’s weekly survey found that the week ending December 25 has a 22.8-percent decrease in loan application volume, and the week ending January 1 the index stayed “relatively the same,” increasing a half a percent. Seventy percent of all mortgage activity, the report noted, was refinancing. The drop in loan applications may be due to holiday vacations for some–others, however, stayed as busy as ever all through the holidays, We certainly did here at Elika.

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.

Despite record days on market for the average apartment in New York in the third quarter “Not Yet A Bottom, But Turning A Corner as Sales Surge“, turns out that not all deals happen below offering price. Residential brokers across the city are finding that bidding wars are coming back, and apartments priced correctly are actually commanding prices above list price, according to the New York Times. Bidding Wars Resume Furthermore, because of the tightness in credit, a lot of the bids are coming in as cash.

Jonathan Miller of the appraisal firm Miller Samuel believes that two-thirds of the estimated 4,000 apartments for sale in Manhattan are overpriced. But those apartments priced 20 to 30 percent the highs of early 2008 are attracting multiple buyers willing to outbid each other, on everything from starter one-bedrooms in Brooklyn to Central Park West luxury enclaves. One two-bedroom on the Upper West Side, for example, sold within two weeks by Halstead Property in October for $1.8 million—at over $200,000 more than the listed price—following a bidding war among nine suitors. Brokers are attributing the phenomenon to pent-up demand and a shift in the confidence of buyers entering the market since Labor Day. The weak dollar also helps, attracting foreign buyers.

According to Halstead’s Amelia Gewirtz, those that are pricing for 2009 or 2010, i.e., “for buyers who think prices might go down another 5 or 10 percent,” are the most likely to attract better bidders. And according to Genifer Lancaster of Prudential Douglas Elliman, pricing below market value can actually result in the apartment being sold far above fair-market price.

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.