Wednesday, April 02, 2008

Manhattan Housing Slump

link
So, not to alarm you, ah, who'm I kidding? In the interest of alarming you, I'll point out that the last bastion of high home prices is slipping...
Sales volume of condos and cooperatives in Manhattan dropped 34%, to 2,282 units, in the first quarter from a year ago, an unusually sharp decline, according to Miller Samuel Inc., an appraisal-and-research firm that tracks New York real estate. But a separate report issued Wednesday by Halstead Property LLC, a Manhattan-based real-estate firm, showed a 1% decline in sales in Manhattan when compared with a year ago.
...
Not all the news is bad. Miller Samuel and Halstead agree prices are rising. The median price for Manhattan homes rose 13%, to $945,276, in the first quarter, according to Miller Samuel. Halstead said the price increase was partly driven by sales at the ultrahigh end of the market, including two homes that sold for more than $40 million each.
...
Agents aren't anticipating the sharp drops in prices that hammered New York real estate during the Wall Street collapse in the late 1980s and early 1990s, when about 100,000 people lost their jobs, according to Moody's Economy.com. The research firm estimates about 33,000 people will lose their jobs amid the current financial stress.

Several factors may save the city's real-estate market from distress. For one, there has been far less speculative building than before the last crash. Secondly, Manhattan has largely skirted the subprime-mortgage debacle that sank markets in Florida and California. That is partly because many co-op boards require sizable personal assets and an average down payment of 35%, says Mr. Miller.

Also helping New York sales are wealthy buyers from Europe, Asia and the Middle East who are taking advantage of the weak dollar to snap up multimillion-dollar condos and townhomes as second and even third homes.

Yeah, again, I don't buy the "wealthy foreigners just want Manhattan homes" argument, because it's stupid. I'm not saying that you're stupid if you believe it, but that's because I'm too polite to connect the dots for you. The foreigners will dump as soon as they see it's not working out -- if they were that committed to having housing here, we'd call them 'immigrants.'

That's a heartwarming point about the co-op boards. There was a lot of whining about how they restrained price growth with their archaic rationalist rules, but it turns out there's a silver lining to intentionally mitigating volatility.

I don't have an opinion about how many people are going to get laid off in the financial sector, but I would expect real estate forecasters to vastly underestimate it. Which, by the logic of the article, would mean that 'New York real estate' would be 'hammered' by 'sharp drops in prices.'