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A few years ago, the television series “Sex and The City” did much to revitalize the island of Manhattan and to reintroduce New York to a brand new generation of people. Suddenly it was amazingly trendy again, and everything New York was desirable, from the fashionable clothes to the magazines to the Cosmopolitan cocktail. Everyone knew who Manolo Blahnik was and no store in America was without his shoes. Even a brand of cupcakes that the characters gushed about became a hot seller, with people suddenly lining up around the block to get into its store.
Chances are it was more than just one television show that made Manhattan what it is. For decades before – and probably for decades to come – the small island will be equated with everything expensive, luxurious, and trendy. It seems as if no one has ever been able to tarnish its image as “the” place to live, and this image doesn’t seem as if it will go away anytime soon.
Bearing out this fact is that, despite the crippling housing slump that has hit so many parts of the country and that has brought new construction practically to a standstill, the island of Manhattan is seeing a record housing boom. Properties are more in demand than ever, and one could even say that there is a housing shortage on the tiny island.
This isn’t make-believe or just wishful thinking. Prudential Douglas Elliman reported that inventory in Manhattan fell 31.7 percent to 5,204 units in the third-quarter from a year-ago total of 7,623 units, while units stayed on the market for 123 days, faster than the 150 days seen in the same period last year.
According to a recent article from CNN, the broker reported that the number of sales increased 65.6 percent this quarter to 3,499 units as compared to the 2,113 units sold a year ago. In similar quarterly reports from Brown Harris Stevens, Halstead Property and the Corcoran Group, all three brokers also reported shrinking inventory.
Looking at the numbers.
According to the article, a Manhattan apartment sold for between a median price of $815,000 and $895,000 during the three months ended September 30. The low estimate was reported by Halstead and Brown Harris Stevens, while Prudential Douglas Elliman pegged it at $864,000.
Corcoran Group reported that the average (mean) price of an apartment in Manhattan jumped to $1.41 million, up 14 percent from the same quarter last year. Prudential Douglas Elliman reported $1.37 million. Brown Harris Stevens and Halstead reported $1.32 million.
Corcoran recorded the highest average condo price of $1.65 million, a jump of 18 percent from a year ago. The median price of a condo hit $1.15 million, up 15 percent from a year ago.
Corcoran also reported the highest cooperative prices in Manhattan at an average of $1.16 million, up 10 percent from a year ago. Median co-op prices rose 7 percent to $695,000.
Why the success?
There are probably a few reasons why the real estate market in Manhattan does so much better than that of other areas. As we’ve mentioned, many people see Manhattan as the trendiest, the most desirable place to live in America, and many are willing to pay for a lifestyle. In New York, there is little concern about the supporting neighborhood, as there may be in other areas. If you want a coffee at midnight, there will be a nearby store open. If you want the best fashion that money can buy, you’re surrounded by the most luxurious department stores in the world. Any form of entertainment you could be interested in is probably only a few blocks away. People have always moved to support their lifestyle, and this isn’t a trend that is going to change anytime soon.
Manhattan’s real estate market has also been helped by the financial services industry, which has had four consecutive years of Wall Street bonus increases with the last 2 years at record levels. A falling dollar has also brought a lot of foreign development to New York, with countries such as Germany, Japan, and even Australia showing record levels of financial investment in New York property. This investment creates and supports jobs in and around the city.
Keeping themselves above the fray.
One of the problems that has brought on the many issues with the housing slump today is that many mortgages are considered sub-prime, that is, were given to risky borrowers in the first place. Once these high-risk borrowers experienced a job loss or other economic downturns, or has their rates adjust to increase their payments, their mortgage was easily defaulted on.
Even though home buyers nationwide have struggled with a housing slump, the Manhattan market is unique, according to Liebman. The city’s real estate market doesn’t share the rest of the nation’s problems, because the rules for getting an apartment already weed out a number of unqualified buyers. “Co-ops are stricter than banks,” she said.
This isn’t meant to encourage the elitist attitude that some in Manhattan may have or desire. Co-ops have a responsibility to their properties and their owners and take that responsibility seriously, unlike so many other areas. However, their detailed and often lengthy process of screening out potential members can be of benefit to both them and the buyer in the long run. After all, if sub-prime mortgage lenders had show as much due diligence in their lending processes, chances are the mortgage industry wouldn’t be experiencing half the problems it is right now to begin with.
Most experts agree that the New York real estate market shows no signs of slowing down. Prices for apartments and condos are continuing to rise, and if Wall Street continue to have records years, and the weakening dollar keeps bringing in foreign investors, chances are the apartments and other residences in Manhattan are only going to get more valuable as time goes by. So for private residents or investors, it’s time to see Manhattan as more than just a trendy spot for a television show; it’s a solid, long-term investment that’s here to stay.
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