We are a nation of homeowners. Tax benefits and government encouragement have always driven American homebuying in a way unfamiliar to most other first world nations. For most Americans, their home represent their larger investment. And in recent years, the fluctuations in value around that investment have become a cause for both deeper interest and greater concern amongst homeowners. Often they will look to the sale of this home as a foundation to funding their retirement. This has created a rather dramatic shift in the way buyers and sellers regard homeownership. While the last recession was set off by ill-considered borrowing and lending, beneath that reality lay a deeper belief: real estate always beats the odds. It could only go up in value and make the owner money.

The recession demonstrated the inaccuracy of that belief. And as national markets struggled to recover over the subsequent years, it was easy to be lulled into the belief that our lesson had been learned. Now, however, statistics begin to tell a different story. Americans are carrying more debt than ever. Non-amortizing mortgages have begun to regain popularity as buyers prefer to save money on that monthly nut. And lending standards, excessively rigorous in the wake of the passage of the Dodd-Frank bill, now seem to be relaxing again, maybe even more than they should.

The Manhattan/Brooklyn real estate market in New York City enjoyed a quick and precipitous recovery from the ravages of the recession. What no one expected was that it would then turn again, at least 18 months earlier than most other national markets. While economists at the National Association of Realtors were still touting the seller’s market, our local market in New York,…