Whether at a cocktail party, a birthday party or school event for my son or daughter, or just a casual dinner with friends, never has the conversation been more real estate centric. The media across the country continues to bombard the consumer with reports of many declining housing markets while Manhattan media has pointed out just how bullish our market has been only recently chiming in with the possibility that we’re not immune to greater market forces. Having said that, the local Manhattan residential real estate market is itself a compilation of multiple micro markets with not only each neighborhood behaving independent of the rest but 3 separate and seemingly independent tiers of market activity.
- Tier 1-The Sub $1M Market: Obviously buyers and sellers who are trading property valued at less than $1M. Inventory is comprised of mostly studios and 1BR’s with some 2BR’s. Buying pool contains many first time home buyers. This market has remained quite active as far as I can see with the last 3 sellers that I have represented going to highest, best and final offers and selling at or significantly above their asking prices. These buyers also seem to be the most skittish.
- Tier 2-The Middle Market: This is the meat of the market in my opinion and consists of those trading property in the $1.5M to $5M price point. My Spring market is late to bloom this year but there is anecdotal evidence that this market seems to be picking up yet again in preparation for another busy season as more of these buyers and sellers are reaching out to me to discuss up-sizing, downsizing and lateral moves. I have many sellers coming to market in the coming weeks and buyers who have been on the sidelines who seam to be ready to jump for the "right thing." I also think that this tier has the greatest segment of Wall Street buyers who are most greatly effected by the financial anxiety to which they work so closely. Despite that anxiety, I have a fellow from Bear Sterns interested in one of my current properties and several Wall Street buyers still waiting for that nearly perfect place.
- Tier 3-The Ultra-Luxury Market: 71 properties over $10M closed in the first quarter of 2008 at 15 CPW and The Plaza. That segment of the market has seen sales volume increase more than 300% YoY. Those are huge numbers that heavily weigh on averages but also show that the wealthy have a great deal of confidence in Manhattan real estate. These buyers aren’t typically looking for a "deal" as much as they are seeking quality of the product. Most of the buyers I have worked with in this price point also see their home, whether it be a primary residence or a 3rd or 4th home, as a place to hang their hat first and a part of their portfolio second (barring the investor or flipper of which Manhattan has fewer than other markets in the country).
It remains to be seen how exactly our local market(s) will be effected by national housing trends, economic reports, and financial worries countered by the desire to make Manhattan one’s home. Whatever happens, I don’t think we can count on the same buyer or seller behavior across all three tiers. One thing you can count on is that people will continue to love Manhattan and owning a piece of it will remain a strong desire by those who can afford to do so.