The Knicks have been in quite a debacle with trading Carmelo this off-season. With Melo initially giving the Knicks an extremely small window of opportunity to be traded (by stating that he would only waive his no-trade clause to be traded to the Cleveland Cavaliers or the Houston Rockets), that window has grown even smaller in recent weeks due to Melo's insistence that he only wants to be traded to the Rockets.
However, the Rockets have very little to offer in terms of assets. Given Houston's limited assets, along with the fact that Knicks management can't seem to bring a third team into the mix, here is a list of reasons why it may be in the Knicks' best interest to simply hang on to Melo for the time being.
The Rockets' offer is laughable
With the Rockets only willing to offer up something in the way of Ryan Anderson so far, keeping Melo would ultimately be a much wiser decision. There is a huge gap in talent and contract situations when it comes to this deal. Melo is a 10-time All-Star and will probably crack the team again, especially with the power shift in the NBA, in the upcoming season. Anderson, on the other hand, has never been close to cracking the team. Anderson is also a longer investment, with three more seasons and more overall money left on his contract, while Melo is only locked into one season with less overall money.
The Rockets gave up most of their valuable assets when they traded for Chris Paul. Had they not sent away Patrick Beverly for example, he could have been a piece that the Knicks would have been interested not only as a defensive pest but as a defensive mentor to rookie Frank Ntilikina. Sam Dekker was also dealt. He could have been a strong young piece to develop alongside Porzingis, but again, the Rockets went with CP in that respect. Outside of those guys, there shouldn't be much else to interest the Knicks from the Rockets, as they should only be looking to stock up on young talent and draft picks.
Melo has a pretty favorable contract
Melo is slated to make a little over 26 million dollars for the upcoming season and has a player option for the season after, which he will surely exercise barring any unforeseen circumstances. This means that one of the worst case scenarios is that the Knicks hold on to Melo for the upcoming season and then have more than enough money to hopefully sign another max player or at the very least start, the rebuilding process and surround Porzingis with some young talent. Also, with the way rich NBA contracts are being spread like a forest wildfire, the Knicks should count their lucky stars that they have a guy of Melo's caliber for the price they have him at. Even if the Knicks can't land a big name free agent if Melo departs for nothing, having that extra cap space would be much better than being tied down to a long term contract with a random player the Knicks land, who ultimately won't do anything to help the team.
Melo is still a great player
After making the All-Star team for the 10th time last season, Melo is showing that he can still bring it to the hardwood. Although his level of play has declined in recent seasons, he still has many attributes that can help the team. After all, he is still a seasoned veteran who has made the playoffs ten times throughout his career. Porzinigs has also stated, that playing alongside Melo has gone a long way with his own development, which is something everybody involved with the Knicks should want. Finally, Melo is still someone you can go to in late game situations when the team needs a bucket and can still handle a huge load offensively throughout a game, whether it would be in the high post or simply bullying his way into the paint.
Phil Jackson is gone and home is where the heart is
Clearly, the biggest issue last season was the public feud between former president Phil Jackson and Melo. Now that Jackson is out of the picture after having been fired earlier in the off-season, Knicks management has said that they would love for Melo to remain in the big apple. Melo has also stated many times that he would love to stay in New York to be close to his family and it's not like it was ever up to Phil anyway, due to Melo's no trade clause, but at least now the head decision maker isn't publicly berating and pushing for the removal of the team's best player.
Melo is at peace with his current situation
Melo recently gave the Knicks some leeway by saying that although he would like to be traded to the Rockets, he is currently at "peace" with his current situation. This means that the Knicks don't have to force anything if they don't want to and the Knicks have been known to cause bad screw ups by forcing things, to begin with, i.e. when they initially traded for Melo. For now, the Knicks should definitely stay put until the Rockets decide to give them a more realistic offer or another team decides that they want in on this dance.