The Times recently noted the cooling in the city’s real estate market has been most pronounced in two-bedroom apartments as well as homes in the $2-3 million range, which typically encompasses 3-bedroom homes. This stands in fairly sharp contrast with the under-$1 million property market, populated by studios and one-bedrooms and where prices and market activity remain robust. Falling prices make the two or three-bedroom space a buyer’s market, with a particular boost for those looking to start and/or raise a family in the city but who may have been increasingly priced out by surging prices. Two-bedrooms in particular are the largest category in Manhattan’s current for-sale inventory, making up a full 31.5 percent of listings. 
However, it is important to bear in mind the hidden dangers in a buyer’s market, most notably deflation. As the Financial Times noted today, sharply declining prices in NYC real estate are leading developers as well as other sellers to make major exceptions to traditional purchase practices as a way to move units. Or put more simply, sellers are undercutting one another in a bid for sales. For example, many developers are waiving the requirement for 20 percent of the purchase price in cash, with some new projects in trendy parts of Brooklyn seeking a mere 5 percent. 
Wherein lies the danger? As the FT notes, buyers are firmly aware of the dynamic at play, and are thus increasingly tempted to hold off for an additional month or continue looking at new places in search of a better deal. Where an inflationary market places the onus on buyers to try and snap up a tempting home before someone else puts in a bid, a deflating market puts much less of a burden on prospective buyers. This risks setting off a deflationary spiral, where the aforementioned developers and other sellers continually undercut one another while buyers, witnessing this race to the bottom (so to speak), continue to withhold purchases.
This dynamic is an important one to keep an eye on because historically, deflationary spirals are more difficult to end than inflationary ones, which tend to cool off when they hit a certain upper threshold that freezes out buyers. In contrast, it can be much more difficult to see where a deflationary spiral will terminate as owners see wealth evaporate and seek to liquidate assets, pulling in more sellers and further depressing a given market. While a few quarters of declining prices is not equivalent to a deflationary, it is worth keeping an eye on the uptick in aggressive sales strategies.
 Chen, S. (November 2019) It’s a Buyers’ Market for Two-Bedrooms from NY Times https://www.nytimes.com/2019/11/01/realestate/two-bedroom-market-new-york.html Accessed November 18 2019
 Chaffin, J. (November 2019) NY property buying rules get bent in ‘scary’ market from FT https://www.ft.com/content/644d8d58-08e2-11ea-bb52-34c8d9dc6d84 Accessed November 18 2019