Amidst roiling financial seas, there are still some safe harbors. And one of the best is right here, right now.
Manhattan real estate – particularly high-end, luxury co-ops and condos – remains strong and steady in a shaky and uncertain economy.
In fact, New York City property is seven per cent more valuable today than it was during the same quarter just last year. According to this quarter’s edition of the Prudential Douglas Elliman Report on Manhattan coop and condo sales, condos alone gained 16.7 per cent year in year over year value since 2010. Today’s average square foot in a Manhattan dwelling goes for $1,130, as compared to $1,095 just last year.
Not a bad return on a Great Recession investment.
True, foreign buyers lured by the cheap dollar drove some of the price gains. But locals are just as savvy when it comes to their real estate. And let’s face it, what other investment promises a solid return while also providing a very nice roof (often with a garden and a view) over your head?
As housing heals, it promises to rebalance the larger marketplace. Stubborn would-be buyers - many of whom are still sitting out the downturn hoping for even lower prices - may accelerate shortages that further increase the cost of real estate. I predict that these housing ‘wallflowers’ could hasten the onset of four to five per cent rent hikes in the near future. And it’s no secret that climbing rents make condos and coops even more attractive – and correspondingly pricier.
Our third-quarter report also reveals that the average Manhattan property now spends 119 days on the market, down from 125 days last year. At the same time, the discount from the original listing price at sale slipped from last year’s 5.8 per cent third-quarter discount to 4.4 per cent during the third quarter of 2011. Nor is this exclusive to the Big Apple. The Business Insider checked 14 top global destinations and discovered that 11 of them, including New York City, saw real estate prices rise this year.
At the same time, Seeking Alpha predicts a combination of demographic trends, household formation rates and housing stock depletion will create a need for roughly a million new homes each year for the next decade.
More people and fewer options lead to – well, you know.
And so, my advice to my clients is pretty much the same today as it was before the downturn; find a place you love, at a price you can manage, in an area that’s appealing, vibrant and thriving - and take the plunge.
And if that place is the capital of excitement, convenience and solid value - Manhattan, New York City – you’re bound to win.
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