Despite the fact that the predictions of many, Manhattan real estate increased in value dramatically during the first quarter of 2008. Led by the luxury market’s massive increase in value, Manhattan led the way for the rest of New York City, which increased its amount by an estimated 28%.
Some important new Manhattan condo developments came onto the market during the first quarter of the year, and their sales have continued to power the market, even as the national business media focuses on the poor state of the national economy.
Indeed, the lesson of the first quarter is an important one: Events not closely tied to the business cycle – in this case, a number of luxury condominiums coming onto the market when worries about a recession began to amount – these events can prop up markets at crucial times, leading to a disproportionately positive impact on the market as a whole.
Some observers have been holding out hope for a similar set of unexpected positive news for the second quarter. The month of April, at least, showed some of those positive signs. The number of sales of existing single-family homes increased to 5,838 from 5,035 in March. That’s an increase of roughly 14%.
While increases are typically expected for this time of year – spring tends to be one of the real estate market’s strongest seasons – the size of the rise is unexpected. It is particularly important because sales volume has been an area of concern since the first quarter numbers showed a decline in year-over-year sales volume of 22%.
The rest of New York state also fared relatively well: Two-thirds of the state’s counties reported increases in sales volume during the past month.
Nationally, mortgage rates are once again beginning to near forty-year lows in the wake of the Fed’s recent aggressive rate cuts.
While there is still ample concern over the future of the national market, it is doubtful that the New York market – insulated by its coops from the direct impact of the subprime crisis – will share the fate that markets like Cincinnati, Cleveland, and other Midwestern cities.
A recent survey has put the average length of owning a home at seven years. Despite the current troubles in the market, it is almost sure that significant growth will be achieved over that time frame.