Having survived the dot-com bust in 2000 and the turmoil following 9/11 while I was working in commercial leasing during the week in Manhattan and in residential properties on weekends on Shelter Island, I have come to trust the instincts that helped me weather these periods.

Not being an economist or a financial whiz by any means, I try to use information available in the national press (which can often be too "henny penny, the sky is falling"), what customers out here are saying about available properties, how sellers are reacting, and the type of sales that have accepted offers, have gone into contract or have recently sold as guideposts.

Real estate is cyclical and the last few years have been the longest boom market for housing on the East End, an area that has been least affected by sub-prime mortgages and foreclosures.

As Pam Leibman, Corcoran's CEO said in the September 24th issue of "Brokers Weekly", "We've been on a good ride for the past couple of years and we should appreciate what we've had and figure out how we're going to deal with a shifting market."

In the same article, Barbara Corcoran, the founder of the Corcoran Group who is now a TV pundit and author, said, "All bad news is contagious and if there are financial woes in the finance world, then it's a big fire that spreads to all business. Right now, the financial meltdown is kicking real estate in its gut. On a positive note, there's something great about reaching the bottom of the market because you have a foundation to build up on and that's the beginning of a recovery."

Some interesting facts as reported by Uri Shamir in the September 17th issue of "Real Estate Weekly" caught my eye: "The dot-com crash of 2000-2002 caused a loss of about 18% of total wealth in the US. Now with oil prices increasing, the value of a dollar falling and the new foreclosure crisis, we have lost less than one-tenth of 1%.

"In 2004-2005, banks spent over $25 million to lobby Congress to change the bankruptcy laws to get protection against the loss of millions of dollars in credit card debt lost when customers filed for bankruptcy. They got what they wanted," Shamir continues, "...over 70% of customers who are more than 90 days delinquent on mortgage payments today are current on their credit card payments. Mortgage defaults have resulted in losses of over $27 billion in 2007. According to the FDIC, NY banks acquired over $4.2 billion in REO properties in just the last quarter of 2007.

"The S&L disaster (1987-1992) created a loss of $17.5 billion (about $29 billion in 2008 dollars). The RTC was created to sell S&L foreclosures and bargains were available all across the USA. Real estate priced dropped for a while and then started going up again. It was inevitable. It is a cycle. No matter how bad things seem to be today, now is not the time to panic. Now is the time to buy.

"...Over two million homes are in foreclosure right now. This represents about 1 house in 1,200 nationwide. However, as a percentage, the foreclosure rate is not too bad; It represents less than 2% of all outstanding mortgage loans.

"Between 2005-2007, lenders issued over $6 trillion in new mortgage financing. Of this, about 20% were sub-prime mortgage loans, about $1.2 trillion. Mortgage defaults are currently about $385 billion, but relative to total weekly bank credit in the US, now approaching $10 trillion (over 12% higher than one year ago), this is less than 4% of all available credit. The loss is reduced by half if the mortgagee only recovers 50% of the debt.

"...The US economy today is around $15 trillion and net wealth is over $60 trillion. The foreclosure rate represents about half of 1% of the national wealth....Luxury condos in Manhattan have waiting lists, luxury car orders are up...Housing starts may be down, but construction projects [in the NYC region]...have not slowed down.

The article points out, "There are several advantages of investing in real estate: It keeps its value over the long run. It is the only investment you can own and enjoy. All you need is a down payment along with a mortgage that provides tax benefits. You cannot control the value of a stock but you have control over the value of your property. Real estate is the only investment that gives you all of these benefits.

"Jackie Mason tells the story about the investor who complains he cannot buy anything...'I could have bought that building 20 years ago for $10k and I would have a fortune today. But they talked me out of it. They said I should wait until the prices come down.' When asked why he does not buy that property now, he exclaims, 'Now? Now the price is too high!'

Real Estate Weekly ends with a word to the wise: "Don't wait to buy real estate. Buy real estate now and wait."

On Shelter Island, sellers who have had their properties on the market are listening and revising their listing prices to the market. Those who have made this revision in the last 6 weeks have had multiple offers and are in contract. The majority of sellers who are putting their homes on the market now are pricing to the new market.

There are still buyers out here, many pre-approved, many making offers.

As Pam Leibman says in the Brokers Weekly article: Brokers..."have to be prepared to do some hand holding, become part financial adviser, part therapist, part broker. Emotions are in very strong play here and the broker needs to keep a level head."

Now's the time to start serving lemonade! Stay tuned...

Noteworthy Books on Design and Homes...

"My Prescription for Anti-Depressive Living" by Jonathan Adler explores Jonathan's own tongue-in-cheek design "manifesto,"with each chapter devoted to a different "tenet," moving through the major incarnations of his interiors and products and ending with the story of his personal creative odyssey. The book is a visual feast, jam-packed with images of interiors and objects for the home, both those designed by Jonathan and those that have inspired him. At the heart of the book are ten of Adler's signature interiors, ranging from photographer Andrea Stern's landmark modernist beach house to the Parker Palm Springs, a desert resort that Adler gave a head-to-toe makeover. Overviews and details of the Parker are prominently featured throughout the book, as are images of the three homes (in Greenwich Village, Shelter Island, and Palm Beach) Jonathan and his partner, Simon Doonan, share with their dog, Liberace, and five other private residences. 

"An Island Sheltered-Shelter Island Celebrates 350 Years" - By Priscilla Dunhill and Alex McLean... Shelter Island through breathtaking photos and lively text that captures the essence of its natural beauty, spectacular beaches, and historic heritage.

"Three things in human life are important. The first is to be kind. The second is to be kind. And the third is to be kind."

~Henry James, to his nephew, William James, as quoted in Leon Edel's "Henry James: A Life"