Key Drivers for Escalating Price Trend in Manhattan

My goal in this is to give you timely and accurate information on the current
luxury market. If you have any questions or would like for me to cover any
particular topic, I would love to hear your feedback.

Key Drivers for Escalating Price Trend in Manhattan 

So who is driving up NYC prices?

Foreign Buyers

At a recent sales meeting among the company’s top producers, we estimated about half of condo purchases in the city are foreign buyers. And while Co-operatives have been historically overlooked by foreign buyers because of the complexity of buying and owning in a Co-op, they now see Co-ops as the new value play. I had an exceptional sale where a European buyer and local New Yorker went into competitive bidding over a Co-op, pushing the price of the property up 20% above the asking price, which brought it to 30% above the comparable sales (we already had it priced 10% above comps). The European prevailed and was clearly bidding to win. When asked why he had bid so aggressively, he replied that he was in the process of moving assets from Europe to the US because he sees the US, and particularly NYC real estate, as a safe investment compared to a more volatile Europe. It is not uncommon to hear this type of assessment among foreign buyers. Even with our newly escalated prices, the price per square foot is still lower than many other major cities of the world, so they are evaluating NYC real estate from a world market perspective. 

Local Prosperity

According to multiple sources, last year was a lucrative financial year leading to more stock redemptions at the major investment banks in January than any equivalent month since 2007.* Because share prices are so high people are cashing out. Now that the market is back up, it’s likely that the redemptions will continue. We should expect a lot of Wall Streeter’s to be amongst our leading buyers once again, along with the hedge funders. In fact, bonuses increased by 15.1%, while the bonus pool is up 44% in the past 2 years.* Where Wall Streeter’s once lacked liquid compensation and liquid net worth, the redemptions now make them a lot more attractive to Co-op boards. I believe a large portion of these buyers are aiming at the Co-op market because it’s cheaper and about 30% more space.

No question about it; all these factors have made it a fantastic sellers’ market at the moment.

However, in spite of all this, the market has been remarkably disciplined in its own way. Even with escalating prices, proper pricing remains critical to selling success. The moment a property falls outside of what buyers perceive to be reasonable price parameters, it receives no attention. Few showings. No offers.

So well-educated buyers can still find value properties.

Lastly, the most important reason prices are rising: living in New York City today has never been better.

Too Much Fun…!

Sure, we make compromises on space, and many other things, but no matter the residential pricing, the city hasn’t been this vibrant in decades. NYC’s restaurant scene and night-life are not only innovative and diverse, but are also packed night after night. There are more trees, benches, and recreational activities than ever before. While NYC was once considered a city most suitable for young adults, many families and empty-nesters now prefer the city to the more quiet suburbs. Perhaps the most appealing factor however is that the city is safe. Whenever a customer asks me which neighborhoods are safest, I honestly answer they’re all safe. There’s not a neighborhood on the island that I’m not comfortable walking through today. And that includes north of Central Park! That is a stark contrast to twenty years ago when you were well advised to stay only on well-lit avenues at night.