For some time, brokers (myself included) have been saying New York real estate is different and stronger than the markets in the rest of the country. This may have seemed self-serving to some, but it was true. In the past month, published reports and analyses have highlighted the truth of this and the deepening chasm between New York and most of the country.
While the New York market has not returned to the frenetic pace of a few years ago, it is showing remarkable resistance and both prices and activity are increasing.
Compare this to the rest of the country where sales dropped by more than 20%. Some of the inequities were camouflaged in the past year by the up to $8,000 tax credit that was available to many buyers who closed before July 1. This had significantly spurred sales in much of the U.S., but, especially in Manhattan, was not a significant force in or area.
Mortgage rates are at unbelievable historic lows. Yet, they are not the incentive for buyers one would believe with tighter, and often restrictive, requirements by lending institutions closing the lending markets to some prospective buyers.
Some reasons for New York’s relative strength are:
- More people are moving into the region than deserting it, according to The New York Times. I am seeing numerous families and young couples choosing to stay in the city and making their initial home purchase or trading up.
- Wall Street has come back faster than expected with fewer jobs eliminated than expected and bonuses approaching pre-2008 levels.
- The Times reported that overall fewer jobs were lost in the city than previously projected with job growth occurring over the past six months. The city lost three percent of jobs from July 2008 to this past July, this was lower than the 4.5 national rate; unemployment at 9.4 percent is slightly below the national average.
- There is a growing job and earnings disparity, the Times said, with those on the lower rungs of the work scale fairing significantly worse than those higher up. For instance, the Fiscal Policy Institute reported that pay of managers rose while that of lower-level workers declined significantly. This is reflected in part in the strong market in Manhattan and weaker ones in the Bronx and Staten Island.
Let’s look at the statistics:
- The Wall Street Journal reported that so far in the 3rd quarter prices in Manhattan were up 14 percent to a median average of $900,000, compared to the 2nd quarter and 16 percent above the 2009 period. Queens and Brooklyn were up in single digits while Staten Island and the Bronx were flat. Nationwide, the media price was $182,600.
- Price increases were in co-ops, condominiums were flat.
- The number of sales was up five percent over the same 3rd quarter period in 2009.
- The Journal reported it would take 9.9 months to sell the current Manhattan apartment inventory, down from 20 months a year ago. The Journal said the market is in “equilibrium” for properties at $3 million and under. The absorption rate is higher for more expensive properties.
- Nationwide, resales of homes fell 25.5 percent in July from 2009 and 27.2 percent from June to a seasonally adjusted rate of 3.83 million sales a year, the lowest rate since 1999. This includes houses, condos, co-ops and townhouses. For single-family homes, it was the lowest rate since 1995. Inventory was at 12.5 months, more than double the normal level.
- New home sales in the U.S. declined 12.4 percent in July from June and a significant 32.4 percent from July 2009. The seasonally adjusted annual rate of 276,000 was the lowest for July since 1963, the year the government began tracking new home sales.
- The median sales price in July for new homes was down six percent compared to June and down 4.8 percent compared to July 2009.
Overall, the New York City market has faired quiet well in this economically turbulent times. Nevertheless, with the national political landscape a combat zone, the economy sputtering along and the public’s uncertainty about the future, it is difficult to foresee what will happen. Looking at the current and recent statistics for both the city and nation, we believe that whatever does transpire, New York City will not be in lock-step with the rest of the country and as the economy continues to improve here, so will the housing market.