By Pamela Liebman, CEO Corcoran

With so much negative press about the real estate market, downward economic pressure and political uncertainty, 2008 may appear at first glance to be the year to hunker down and wait until it all blows over.

But wait-and-see is a dangerous game in New York. What New York has going for it that other parts of America don’t is its status as a global city. New York is a key part of an international network of major business/finance/media/culture hubs through which a vast amount of essential work flows. As a result, there is always a need and a demand for residential real estate amongst an international clientele of professionals, executives, creative artists and the wealthy. Those facts haven’t changed and aren’t likely to anytime soon.

I know what you’re thinking: what about the credit crisis? It’s true that the credit crunch is going to impact the real estate markets. One of the most anxiously discussed potential ripple effects for the New York market is whether our clients from the financial sector will have bonus money to spend in 2008. However, the evaporation of Wall Street clients is not one of the ways I expect it to play out. For one thing, many of those working in finance still made bonuses in 2007. Those may be reduced, but when you’re coming down from six and seven-figure bonuses by 5 or 10 percent, that’s still not too bad. For another thing, the financial sector represents just one segment of our annual business – it’s a significant minority, but not a make-or-break affair.

One effect that we know that the credit crunch will have will be to tighten the ability of developers to secure funding for the kind of new properties that have driven our market over the last five years. We should see two paradoxical effects of that phenomenon: first, a perception of decreased inventory of quality property so that buyers will become more aggressive for certain property types, and second, a withdrawal from the market of high-end condos so that prices drop or stagnate. How the market will cope with these two contrasting forces will be interesting since there will be pressure on sellers to “get more realistic” and bring their prices down while at the same time some sellers may experience more demand for their properties and that will have them digging in their heels on negotiability.

In such an environment, real estate agents will have a lot of work to do to balance clashing expectations because the economic and psychological forces putting pressure on American consumers are very real, even if they do not impact New York in the same way. People know that the dollar is weak, that oil and gas are high, that we face political uncertainty in the face of the 2008 election, that we are still mired in an unpopular war, and that there is a very serious and very real credit crisis in this country. None of that inspires a lot of confidence.

What agents have to do is speak the truth about the New York market – tell their clients how it performed historically, why it is still a vibrant and important place to live and own your home, and concentrate on the real and personal reasons why their clients need to or ought to buy here. Most consumers purchase a home because they have a life-changing reason that necessitates the move – not because they want to make a quick buck. Finding the right home is a deeply personal experience, made up of an alchemical mix of price range, space, bedrooms, views, neighborhood, architecture and myriad intangible qualities that no one can articulate perfectly. But we know the perfect place when we see it. That’s why it’s better to act than to regret later that you lost the home of your dreams.

I feel confident that New York’s real estate market is going to be just fine. We are emerging from six years of unprecedented activity and growth during which a lot of families “traded up” thanks to record low interest rates and a significant baby boom in New York City (there are 32% more children in the city under the age of five now than there were in 2000). We are going to see those families holding on to their homes longer but not because they changed their plan – they weren’t property flippers – but because they always intended to be in them for the foreseeable future. In the meantime, they’ll sit back and watch their home equity grow while they raise their children, advance their careers, and live out their dreams in the world’s greatest city.