Manhattan Remains Stronghold of Nations Real Estate Market - Real Estate

Manhattan Remains Stronghold of Nation's Real Estate Market   by Nicholas A Judge

in Real Estate    (submitted 2008-05-04)

As the subprime crisis only gets worse, the nation's housing market is set

to suffer the same ignominious fate as it did in 2007. Last year was

the worst year for the national housing market since the Great Depression,

and the subprime crisis is beginning to give America's financial markets a

reputation as the world's chief exporter of recessions. 2008 is expected

to be as bad, if not significantly worse.

A number of housing markets, however, have remained strong during this time. That

could still feasibly be characterized as a bull market.

Even here, most of the market has reached a standstill, neither advancing

or retreating in a particularly stark way. However, the highest of the

high end New York apartment market has continued to push forward, with a number

of positive developments and new buildings coming on to the market.

The significant growth in real value of the New

is largely thanks to the housing Coops that most free market-loving economists

typically deride. Their stringent regulations effectively sheltered the

market from the direct impact of the subprime crisis. As such, the rest

of the market has held steady, allowing the advances in the high end market

to create a significant uptick in the overall value of the Manhattan real estate


The statistics showing this large increase in average value during the first

quarter of 2008 are not particularly important unto themselves. In the

context of Bear Stearns' collapse, however, they were a surprising piece of

positive news that has kept confidence – the life blood of any market – alive

and well in the New York apartment market.

The rest of the New York City market, however, is not faring as well. While

high end markets outside of the borough are doing well, more middle class neighborhoods

are feeling the effects of the national economy more acutely. Queens,

for instance, saw a 12% year-over-year decline in average prices for the first


The Bronx and Staten Island, meanwhile, saw smaller declines in average prices.

As the national economy worsens and the rest of the city begins to be pulled

down by the national real estate market, the resilience of the Manhattan market

will be tested.

Whether or not it passes that resiliency test remains to be seen. If

any place can, it's Manhattan. The result of that test seems to be dependent

on the fate of the city's vaunted financial services industry. If there

are more Bear Stearns, no market can hold up against that pressure. If

we've seen the worst that Wall Street incompetence has to offer, than Manhattan