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Friday, January 25, 2008

The Corcoran Report 2007 Year End Wrap-up

corcoran report 2007 on the manhattan real estate marketcorcoran reportHere 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.

download the 2007 Year End Corcoran Report (2.5 MB)

updated 01.27.2008

Thursday, January 24, 2008

Corcoran and Curbed at Inman Connect

professionalThis talk about the marketplace, technology and brokerage practice was one of the many highlights at the InmanConnect Conference held earlier this month in New York City. This segment featured three of the most informed people working in the world of real estate, Lockhart Steele, founder & publisher of Curbed.com, Pam Liebman, president & CEO of my affiliated brokerage The Corcoran Group; and moderated by InmanNews founder Brad Inman, who helped keep the discussion lively. I attended this session and can tell you that the audience, which came from across the country for this three day event, was riveted by this discussion whose subtext was about the vibrancy and resilience of the New York City real estate market— in sharp contrast to the downwardly trending national market.

Thursday, January 24, 2008

podcast: It's a Bird...It's a Plane...It's a Recession, or Is It?

Here's a timely interview with Wharton economists Jeremy Siegal and Franklin Allen, commenting on this week's developments in the global financial markets, and their views on the broader U.S. housing market.

super stock broker

economyIt's been quite a week. Stock markets around the world showed sharp declines on Monday; on Tuesday, the Federal Reserve cut its benchmark interest rate by three-quarters of a percentage point. The rate cut helped stem the losses on some indexes, but by January 23, the volatility had returned. The obvious fear is one of recession— a possibility that the White House and Congress are trying to avert by coming up with a stimulus package that will keep the economy off life support. Are we headed into a recession? How effective will the Fed's interest rate cut be, and what is the outlook for the Asian and European economies? Knowledge@Wharton asked finance professors Jeremy Siegel and Franklin Allen to comment on these issues.

Knowledge@Wharton: We'd like to begin by asking you whether the Fed overreacted to the upheavals in the global markets. What do you think?

Siegel: No, I think that they acted appropriately. If you look at where market investors were expecting interest rates, by looking at the term structure, it was very downward sloping over the next couple of years, which means that they expected those short term interest rates to go down. We don't like inverted term structures. Bernanke has talked about that. They don't signal good things. You want to get that short rate below the long rate. I think that they went a long distance in doing that. What will be of interest, of course, is to see what they are going to do next week. The market surprisingly is expecting another 50-basis-point cut at their January 30th meeting.

continued+

Monday, January 21, 2008

A forgotten Keith Haring discovered in Tribeca condo

tribecaThis is a video report by Bradley Hope at The Sun about a lost work by Keith Haring which was recently uncovered during the redevelopment of a loft at The American Thread Building in my neighborhood of Tribeca. The space was formerly an exhibition space in the old days when Tribeca was an artist's neighborhood and you might find Haring at the Mudd Club on White Street a few blocks away. The work is similar to the painted patterns that he did on the walls, floors, and ceilings at the Pop Shop and the 23rd Street gallery at the School of Visual Arts, where he and I crossed paths in 1979, just before his rise on the 1980's art scene. I remember him taping similar drawings on the underside of the cover mats of copiers in the cafeteria at SVA one day, so that students would get a free little bit of art on the edges of their copies. Much of the work from this period like his famous subway drawings, were experimental, effusive and temporary in nature, a good deal has been painted over and lost. Keith Haring died in 1990 at the age of 31, of complications related to AIDS. His work is iconic of the 1980's New York Art scene and continues to inspire new generations.

I'd shown this space when it was on the market a couple of years ago. It was a huge, dramatic, but very clunky commercial space, which required a bit of vision on behalf of a purchaser and their architect to mold into a residence. There was no sign of Keith's work visible at the time. It was on the market then at about $4 million and in need of a complete gut renovation. Including the Haring mural, the renovated space is now being offered at just under $17 million. Since the art can't be moved, I certainly hope that whoever acquires it, will appreciate and preserve the work that accidentally graces their new home.

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