Our First Post!

As a real estate broker, the question I am most frequently asked is "How's the market doing?"

While each sector of the market (sales/rentals, commercial/residential) is governed by its own dynamics, a common thread is that "it could have been much worse."

Whereas markets in Arizona, Florida, Nevada and California have experienced near total collapse, the Manhattan market has held up quite well.

Let's start with residential sales. I think the best barrometer for comparison are the closing prices for the same or same-line apartments. The easiest buildings in which to find such comps are highrise condominiums with like floorplans. Although the science may be inexact, a look at a couple of buildings reveals similar trends.



1) Manahattan Place, 630 First Avenue

S Line - Floors 5-35 - 654 SF 1BR East River View. See Pics Here:


Apt # 11S - Sale Date: 1997 - Price: $180,000
Apt. #7S - Sale Date: Sep. 2003 - Price: $390,000
Apt. #8S - Sale Date: March 2004 - Price $449,000
Apt. #17S - Sale Date: Aug. 2008 - Sale Price $645,000
Apt. #21S - Sale Date: March 2010 - Sale Price $570,000
Apt. #8S - Sale Date: May 2010 - Sale Price - $625,000

1) Assuming that the #21S closing is a conservative reflection of present market value, the S-Line has appreciated 316% since between 1997 and 2010.

2) Assuming that #17S sales represents a slightly below peak price, the S line has declined about 15%.

3) I think the guy who bought #8S overpaid!


Consdiering that markets like Las Vegas and Miami have reached 1990s prices, Manhattanites who bought their apartments in the late 1990s and early 2000s have preserved substantial gains.


Building 2) 200 Riverside Boulevard
B Line Floors 21-35, 1120 SF 2BR-2BA - See Pics Here


Apt. Sold Price APPSF Sold Date


30B $1,350,000 1,205 18-Feb-10
31B $1,300,000 1,160 12-Feb-10
35B $1,510,000 1,348 11-Dec-07
21B $1,275,000 1,138 26-Dec-06
28B $1,330,000 1,187 1-Sep-06
23B $1,160,000 1,035


Again, we see about a 15% decline off the peak price and a return to 2006 levels.


Some commentators have pointed to a recent uptick in rental activity as a precursor to a rebounding sales market.


I think such sentiment is a little premature. While not as vulnerable as markets like Las Vegas and Miami, the New York real estate market remains linked to larger macroeconomic trends.


Over the last decade, we have endured the collapse of the tech stock and real estate bubbles. As we are seeing in Greece, the next hurdle is the sovereign debt bubble.


In the U.S., a number of state and municipal governments are already on the verge of bankruptcy.


The Federal government has assumed a health care entitlement even though it has provided no roadmap on how it will honor unfunded obligations ranging from social security to medicaid/medicare to Fannie and Freddie mortgages. It continues to implement many of the same stimulative policies that contributed to the last two bubbles.


If we continue down this path, our creditors may demand higher interest rates to keep financing our debt. Higher borrowing costs would depress real estate values and push many ARM holders into default.


Such instability could further undermine the equity markets, discouraging buyers from using their cash reserves to make down payments on apartments.


As the Federal Reserve can always print money to fulfill Uncle Sam's financial obligations, perhaps inflation could forestall any further decline in real estate, at least in nominal terms.


Eventually, our economy will recover. The sooner the government implements policies that encourage savings, investment and production as opposed to spending and borrowing, the more quickly we can all move forward.


Greg Harden