City Real Estate Market Rebounds Sharply in January
The lower prices and negative psychology that dominated the New York City real estate market last year went “poof!” last month as the bonus-rich and others showed a renewed appetite for residential properties of all shapes and asking prices. Overall, both prices and the number of signed contracts rose more than 10% year-over-year in January….
The lower prices and negative psychology that dominated the New York City real estate market last year went “poof!” last month as the bonus-rich and others showed a renewed appetite for residential properties of all shapes and asking prices. Overall, both prices and the number of signed contracts rose more than 10% year-over-year in January. [Buyers’] psychology has changed, said Frederick W. Peters, the president of the Warburg Realty Partnership. For almost two years, they’ve been scared that the market would plummet and they’d end up like fools who paid too much. Steven L. James, director of Manhattan sales for Prudential Douglas Elliman, calls it a “cautious exuberance.” One example: A park slope brownstone asking $2,475,000 that sold in a day. And in a further sign of strength, there is lots of demand for apartments and houses at all points in the price spectrum, not just the high end, according to Jonathan Miller of Miller Samuel.
Housing Market Heats Up Again in New York City [NY Times]
Photo by John Marshall Mantel for The New York Times
All I can say is that NY is in many way different. I for example cam to this country with $500 and a suitcase. Now I make more than 500K on WALL STREET!! I bought in brooklyn and my in-laws which have been living in setauket for the lasdt 30 years are retiring in NYC and so are many of their friends. NYC today is more than just a city for new immigrants like me but also for overseas investors and empty nesters looking for some exitement in their retirement.
One thing missed here I think is the difference in townhouses vs condos. The supply of the former is fixed (almost apart from 14townhouses how many new ones have been built in the last 5 years?). On the other hand the supply of condos seems to be growing – so with an increasing supply of condos if there are going to be price drops you might expect to see them in condo market first. On the other hand if wall street tanks it would hit high end market first.
SPer makes some good points. I actually wrote a research report on urban demographics in December as part of my day job and can provide some insights.
One big problem is that census data is only provided every 10 years and population shift estimates, etc. in the interim are much less concrete. Even census data has some holes when looking at populations for NYC, which probably includes a fair number of illegal immigrants and people who move around a lot (young people/students, foreign workers, students, etc.). People with second homes in the city probably also would not be counted. Needless to say, this helps explain the dearth of data in many of the articles you read.
That being said, here’s a quick data dump:
-From 2000-2005, the NY metro population grew by 1.6% to 8.14 million – more than Detroit, which shrank, but way less than the 6-10% increases seen in Sunbelt cities like Phoenix and Jacksonville, and way less than increases in the US population overall.
-Income levels are surprisingly low for NYC given the cost of living: Median is $43,400, below the US median of $46,300. This is partially due to much higher poverty levels in NYC (and other major cities) than the norm. NY does have more high-income people as well (4.6% make $200K or more per year as compared to 3% for the US overall).
-I tried and tried to substantiate the “empty nesters are coming back” or even the “more families are staying in cities” arguments (admittedly looking at urban areas overall, not just NY) and was unable to find any hard data EITHER way. NY does have the second-highest median age amongst the 15 largest U.S. cities though, which may also be due to smaller family sizes and more childless/single people living in the city.
Hope this is helpful, I worked so hard on the report it is nice to be able to share the info ;-).
Overall I do think NY is a bit different than other cities, due to the tight clustering of jobs on an island and the transportation infrastructure – in other cities like LA or Phoenix, everyone owns a car and is resigned to a commute, whereas you can really save both money and time if you live within subway/bus distance of your job in NYC.
The issue of wealthy second homeowners can’t be counted out either, this same factor also helps drive up housing prices in resort areas like Miami. But that certainly doesn’t mean NY is immune from the same market forces as the rest of the country, and I do think we’re still in for a market correction; how bad remains to be seen.
So, can you buy a condo right now in NYC, Washington, Miami or San Diego and rent it for enough to cover your nut?
If you can’t flip it, why would an investor invest? If there were no investors, where do prices go?
So, a few folks got excited about a 10% drop. The numbers still don’t add up. Stay tuned.
Thanks for the explanation, Anon, 12:01 & 7:48.
These back and forths are really wack Sper and all because you can’t handle the truth.
“Do you actually believe that people looking for a home don’t contemplate whether it’s a better value to buy an apartment vs. buy a house?â€
Never said that dumb comment. It seems like you a have a complex with your apt. Did I trigger this complex by mentioning “back yard”? My bad.
“And are YOU seriously saying that because “god isn’t making any more real estate”, that real estate prices will always rise?”
HELLS YEAH!!!!!
bored at work: Since signed contracts are not part of the public record, and since any signed contracts signed in jan/feb won’t close until march/april, anecdotal evidence is all there is to go on. This article is just trying to report on the most up to date info available. You can obviously choose not to beleive it, but since the NYTimes has been reporting possible bubble conditions for some time, you would be choosing selectively.
I am not going to comment on the bubble/no bubble, but I did find it interesting that the articles relies almost exclusively on quotes from sales brokers about whats happening in the market. It cites a grand total of one example in Brooklyn (house on Montgomery Place) as indicative of the market.
A trend based on one example?
Last year but — NYC is nto a growth area compared with the rest of the country.
Census Shows Sunbelt Grows More Than City
BY RUSSELL BERMAN – Staff Reporter of the Sun
March 16, 2006
URL: http://www.nysun.com/article/29235
The city’s population is growing at a slower rate than that of urban centers in the nation’s booming Sunbelt, but the Big Apple is outpacing its historical rivals in the Northeast and Midwest, data released yesterday by the Census Bureau show.
The five counties that comprise New York City grew by about 1.65% between 2000 and 2005 and stand at about 8.16 million people, according to the bureau’s estimates. While New York beat out counties serving cities such as Philadelphia and Chicago, which showed declines, the five boroughs lagged well behind hot spots in the South and West, including Los Angeles, Phoenix, Houston, and Miami.
The data further show that New York’s population declined slightly between 2004 and 2005 and that immigration was lower than the five-year average, a drop-off the city is disputing.
Analysts point to a variety of factors to explain the city’s growth rate. A steady flow of immigrants has kept New York ahead of other Northeast cities, while steep housing costs may keep the city from further growth.
New York has long relied on an influx of foreign immigrants to replenish losses caused by the departure of native-born residents. Long-range population trends are notoriously difficult to predict, but signs that immigration to the city may be slowing are a concern for future growth, urban studies and population scholars said.
“The trend is definitely slowing down and possibly plateauing, but where it is going it’s too early to say,” a senior fellow at the Manhattan Institute, E.J. McMahon, said of the city’s population. “The thing that’s pulling it down is a slowdown in immigration, as well as real estate and housing costs.”
A fellow at the Center for an Urban Future, Joel Kotkin, said immigration patterns are becoming more dispersed across America. “What I do sense is that immigrants are getting smart about America and are realizing that there are a lot of other places to go besides Los Angeles and New York,” he said.
Any drop in the city’s population would appear to cast doubt on the city’s preparations for a major population boom in the coming decades. Over the last several years, the Census Bureau’s release of a county-by-county population estimate has prompted an annual clash between the federal agency and administration officials who argue that the bureau consistently shortchanges the city’s population. The city contends that the bureau’s methodology does not take into account new housing construction, which is the basis for the administration’s calculations.
The bureau acknowledges that its methodology may not work for counties like New York’s. “It is something that we’re looking at, but we don’t have a definite plan as of yet to incorporate the housing data,” a demographer with the bureau’s population division, Gregory Harper, said. In the meantime, “we have to have a methodology that we can use for all counties,” he said.
The city successfully challenged the bureau’s estimates last year, resulting in a bump of more than 64,000 people in the revised figures. It plans to do so again this year, the director of the population division at the Department of City Planning, Joseph Salvo, said. He said the city believes its population is about 8.2 million people, which would mark an increase of less than 1% from last year’s revised estimates.
“We are in growth mode,” Mr. Salvo said. “We are planning for growth.”
Mayor Bloomberg has made preparing for significant population growth a major theme of his second term. The city expects the population to reach 9 million by 2020, and Mr. Bloomberg said in his State of the City address in January that he plans to lay out a strategic plan this spring to cope with the anticipated boom.
An economist and the co-founder of Urbanomics, Regina Armstrong, said she expects the city’s population to continue to grow. The demographics of that growth also puts the city in a solid economic position, she said. While the rates of increase in places like Phoenix and Scottsdale, Ariz., dwarf those of New York, they draw many retirees who do not contribute to the labor force. New York, on the other hand, “is attracting a lot of younger people, which keeps the city vibrant,” Ms. Armstrong said.
Analysts agreed that the city’s high cost of living, heightened by rising real estate prices, was a top challenge for maintaining population growth in the future. “Even though New York has done a great job with crime, and it’s more pleasant, it’s just too expensive,” Mr. Kotkin said. “There are a group of people who are locked out of the market permanently.”
Among the five boroughs, Staten Island (Richmond County) experienced the greatest increase since 2000, at 4.7%. Manhattan (New York County) grew by 3.6%. The Bronx, Brooklyn (Kings County), and Queens all showed increases of less than 2%