Friday, January 25, 2008
Here is the 2007 Year End Corcoran Report (2.5 MB). It's a snapshot of the past year's tends in residential Manhattan real estate. Throughout last year, the press has inked reports about the challenges facing the national residential real estate market stemming from the sub-prime mortgage crisis, over built inventory, slowing sales and increased foreclosure rates. In sharp contrast, this report shows that Manhattan continued to demonstrate strength last year, especially in luxury properties. We've been largely insulated from the sub-prime crisis by the rigorous financial review process by co-op boards on prospective purchasers of shares. This still represents the vast majority of NYC housing stock. Here are some highlights of what happened from 2006 to 2007:
- The average sale price of all Manhattan apartments was up 12% to $1,395,000
- Condominiums sold briskly and made up 55% of all deals for the first time.
- Condos increased by 9% on a price per square foot basis to $1,222
- The median condo price was up 17% to $1,100,000
- Co-ops increased by a more modest 3% price per square foot to $918
- The median co-op price was up 2% to $666,000
Favorable rates of currency exchange for international buyers continue to catalyze foreign investment in property too.
I read it as a vote of confidence by the world on the long term health of Manhattan real estate.
the pulse of the market
The year was epitomized by a number of high profile luxury residences, closing at record setting numbers; most notably uptown were Robert A. M. Stern's15 Central Park West & The Plaza hotel conversion. Further downtown, we saw more sales records achieved by cutting edge projects like Herzog + de Muron's 40 Bond Street, Jean Novel's 100 Eleventh Avenue in West Chelsea as well as 40 Mercer Street in Soho; and SOM's 101 Warren Street in Tribeca. All are among the most significant residential architecture being envisioned and built in the world. Quality design, construction, visionary development, and lifestyle amenities are the essential selling points for luxury buyers in Manhattan. Overall there continues to be a shortage of quality inventory in every price category. This limited inventory and a concentration of high net worth individuals are unique, distinguishing characteristics of our local market. Favorable rates of currency exchange for international buyers continue to catalyze foreign investment in property too. I read it as a vote of confidence by the world on the long term health of Manhattan real estate. One example is my exclusive at 9 West 19th Street where 8 of 10 offers were transmitted from overseas buyers now in contract, at full asking, to customers from Spain.
the flight toward quality
At best, reports on housing tends to lag the current market by a few months. Reporting is for sold and closed deals, which were negotiated 60 to 90 days prior. Our year end report report comes at the end of a particularly volatile week in the worldwide financial markets, which was underscored by the Fed's surprise rate cut on January 22nd; along with news of a temporary economic stimulus package, the financial markets seems to be pacified for the moment.
Yes, it is reasonable to think that if the overall U.S. economy slows in the upcoming year that NYC will not be immune to its effects; but I predict that this will be seen as a opportunity to buy; counter balancing the effect. In times of uncertainty it is also reasonable to see a flight toward quality in one's personal investment strategy. Few seem as high quality to me as Manhattan real estate. I personally expect that to continue. Demand will continue to outstrip supply.
So where are we headed today? There are several positive signs in our market. First is the previously mentioned demand for quality property. When asked about it earlier this week, a majority of my colleagues reported that they are busy with clients and/or have offers on listings. Bidding wars are not uncommon on desirable, and properly priced homes. Inventory is tight, the market is far from spilling over with properties for sale. For buyers, the news environment has encouraged them to test the market and try negotiating more favorable prices. There is a bit more horse trading going on. Open house traffic is normal, and deals are being made.
Real estate is not a liquid asset, it is inherently complex. It can't be traded with the click of a mouse. Unlike a block of stock traded on Wall Street, the block you live on is a rather personal, special choice. Each parcel is unique. With slumping housing prices in many parts of the nation, we don't see people who want to be New Yorkers packing up and moving to the mid-west, where it would seem some property bargains might exist today. It's more than housing it is New York City itself which people are buying into. Property markets are local and interdependent with their communities. The majority of Manhattan homes are personal residences, not speculative investments. In my opinion that means that the marketplace will react more to the long term confidence in Manhattan as a great place to live, not the gyrations of the financial markets. The city is safer than ever, schools are improving, and investment in infrastructure is up. Our population is growing and projected to continue. People are choosing to retire here because of the services and excellent medical care. Put simply, it is is a place where people want to live and work. The fundamentals of the city are strong. Our buyers are seeking homes for themselves and their families, to live in the most exciting city in the world. I'm fortunate to live and work here.
For my clients, it is a time when having professional guidance in pricing, marketing and purchasing a home are more crucial than ever to their success. I help them to acquire and re-sell newly developed condos, green homes, co-ops, townhouses, and small buildings. Please feel free to ask any questions you like in the comments section, drop me an email, or a call, if you are wondering if this might be the right time to buy or sell your property.