2007 was an incredibly unique year for the Manhattan real estate market. It saw a confluence of conflicting trends and market events that were enough to make more than a few economists’ heads swoons. While the national market had literally its worst year since the Great Depression, New York homes shot up in value to set new records in all sorts of categories.
A new year-end report Corcoran Group Real Estate has given us some of the most reliable data to date on the 2007 market.
Perhaps most importantly, the value of New York apartments and homes in Manhattan rose a very impressive 8% to an average of $1,105. The average price for an apartment rose to an astounding $1.395 million. That was a 12% increase over 2006 levels.
Different pieces of evidence suggest the market was primarily a seller’s market for most of 2007. All-cash deals, for instance, maintained a frequency considerably greater than the vast majority of US cities.
One of the most important trends in the NYC real estate market picked up the pace in 2007: a larger and larger share of New York apartments are being sold as condominiums. Roughly 55% of all completed deals in Manhattan this year involved condos. Similarly, condos experienced an average price increase of 9%, compared to just 3% for apartments in co-op owned buildings.
Much of this disparity in price increases came from the rise of the luxury condo. Many such new condos that came on the market in 2007 for the first time are in new buildings designed by some of the world’s leading architects.
More anecdotally, there is evidence of important changes taking place in some Manhattan neighborhoods. Districts that once offered little in the way of residential living have seen new residential buildings spring up and other important changes take place. These changes are creating new areas and neighborhoods, somehow fitting more living space in already crowded Manhattan. Examples include new living quarters in the Financial District and changes to the face of Hell’s Kitchen. Similarly, Alphabet city continued in 2007 to become a safer neighborhood that has become a new cultural hotspot.
All in all, 2007 was a great year for New York apartments generally, especially Manhattan apartments. Growth in value started to taper off towards the end of the year, and there are signs of some trouble on the horizon, but even the most pessimistic predictions call for a drop in the value of a considerably smaller scale than the gains that 2007 made. Furthermore, as much needed housing developments occur throughout the island, Manhattan’s real estate market will only improve its ability to meet the high demand for its housing.