For most of my 15 years in the Manhattan real estate market, I have been expressing concern over where the middle class will live as property values have become more unaffordable for that segment of the buying population. Here are some of my recent blog posts regarding this issue:
- New York City to the Middle Class: See You Later
- Mixed Emotions for a Manhattan Broker: Stuyvesant Town and Peter Cooper Village on the Block
- Condominium Conversions Alter the Social Fabric of Manhattan
- Rent Control for Millionaires
Now the problem is spreading to the six-figure earning upper middle class. Max Abelson of The New York Observer points out that "Manhattan housing hasn’t been affordable for a long time. But now, even the upper-middle class can’t catch a break."
For the first time, even six-figure professionals—and six figures puts you in the top 10th of national income rankings—are being pushed off Manhattan Island.
“Five years ago, the price point wouldn’t be $600,000, it would’ve been $300,000,” said Pam Liebman, the president and C.E.O. of the Corcoran Group, referring to the rough cost of a basic apartment here.
The relatively rich suffer; the filthy rich prevail. “There has to be a middle ground between affordable housing for the low end of the demographic spectrum and the ultra-luxury at the top,” said appraiser Jonathan Miller, who authored the Elliman report. “You want to attract talented people to maintain your viability, and you can’t do that if they can’t afford to live here.”
…Therefore, a prospective Manhattan homeowner not only needs to be among the top 10 percent of Americans in income, but also must have gobs of saved money, too.
I have been watching the "luxury gentrification" of Manhattan for my entire real estate career and truth be told, I have benefited from it greatly from a financial perspective. Having said that, on a regular basis I witness both young and established professionals struggle to afford homes in Manhattan. The frustration for these educated, successful people is disheartening as they are becoming less likely to be able to raise their families on this incredible island. I have watched many flee to the suburbs as the gentrification of Manhattan creates a homogeneous environment that is altering the character that has always made NYC so special.
There is no doubt that more affordable housing needs to be built in order to stave off the possibility of a mundane, boring, and uni-cultural city. Until that happens, Manhattan becomes increasingly more wealthy and that is actually good news for those of us who own if all we are considering is our bottom line.