Manhattan's Residential Market in 2003

The early days of 2003 have found Manhattan's residential market returning to more normal levels of activity. This normalization has been sustained in part by the residential market's relative stability in comparison to the more volatile financial markets. Assisted by continuing low interest rates, prices for smaller apartments have held up well. It appears that buying is still more attractive than renting to most New Yorkers.

Properties with deficiencies in condition, location or overly optimistic asking prices have required flexibility of their sellers. The hardest hit market was the six to eight room family apartment, especially if overpriced, unrenovated or poorly located. This past year saw the return of negotiability in asking prices after a relatively long absence from the marketplace. The boards of directors of cooperatives continued to be rigorous in their screening practices and this practice of careful scrutiny has been spilling over into condominium buildings as well.

Still unknown is the long-term impact of the substantial rise in New York City property taxes. Coupled with rises in insurance in the wake of September 11th, and high fuel costs due to a colder winter than those of recent years, maintenance in cooperative buildings and carrying costs in condominiums are beginning to rise. How these increased expenses will affect sales prices remains to be seen.

The war in Iraq has affected the financial markets and New York continues to contend with a declining economy and job losses in the financial sector over the past two years. It is unknown at this time how a protracted resolution to the conflict will affect the residential real estate market.

Alice Palmisano
Senior Director
4/2003

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