If you need a barometer for just how bad real estate conditions have become, you don’t have to go much farther than the Lower Manhattan area of New York City. Even though housing in New York State in general held up well because the types of loans that impacted other areas of the country weren’t prevalent in the state, Manhattan proves that other factors can have just as devastating an impact.
First, to catch everyone up to speed, there’s Upper Manhattan and Lower Manhattan. Upper Manhattan is usually considered as 96th Street and above, but in some measurements Upper Manhattan starts around 59th Street. It’s an important distinction more for political reasons, but when most people around the country think of New York City, they’re usually thinking about Lower Manhattan, and that’s what we’re talking about here.
Second, there are very few actual houses in Lower Manhattan. Most properties are either apartment rentals or condominium purchases. The average price of a condominium in 2008 was $975,000; right now, that price has come down to around $725,000. New condo prices have fallen to $1.069 million from $1.145 million last year. There are also a lot more empty condos than New York is used to, as waiting lists dwindled drastically in most areas.
The problem here, of course, was the crashing of Wall Street. Many finance companies ended up letting go of a high number of employees when there wasn’t as much trading activity going on, and obviously no one living in New York City can survive on the state’s high unemployment payment of around $450 a week. In NYC, a condo is like owning a house, only you pay separately for a place to park your car, if you have a car.
And those are only condo prices. Apartments can go for more than condos in Manhattan, and there, the average price of an apartment has fallen from $1.56 to $1.26 million dollars, or 24%, for mid-priced apartments. Luxury apartments have also tumbled 25%, from $5.95 to $4.76 million dollars a year.
Numbers like these are hard to fathom for most of us, but it also makes them easier to see the difference in dollars and how they might affect things. In a state like New York, which is different than most states because a big part of its yearly budget comes from Wall Street, they were already going to suffer a $200 billion budget deficit, and add on top of that the tax loss that the city of New York is suffering from only Manhattan, and you have a tough situation that will impact things like schools and services.
Luckily, the last quarter has shown a 10% growth from the previous quarter, which may signal that New Yorkers are ready to start buying again. Some of them will find what they consider as nice deals also. Truthfully, almost anywhere you live in Lower Manhattan puts you close to something exciting. All you have to worry about is paying for it.
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