By Andrew Fine
2007 has been a year marked by uncertainty. There was a credit market freeze, a roller coaster ride stock market, a national housing market slump, a surge in nationwide foreclosures, and rumors of lenders going insolvent. While all this was going on, what has happened to Manhattan real estate? Well, not much at all, and more of the same. Prices year over year are up, sales volume is steady, and Manhattan just keeps going. There has been some price erosion in fringe areas like Harlem and The Financial District, but it has been limited and isolated to a handful of buildings which may have been overreaching in the first place. Every November and December, as reliably as leaves falling off the trees, you hear brokers crying about how it's slow, and then every January things start popping again. So what of 2008?
Looking forward there are some positives and negatives to consider. Negatives-economic growth looks anemic, it's an election year (more uncertainty), the credit crunch and related job losses continue, and the national housing market is still a mess. The positives are still plentiful. Rates are low and will likely go lower. The dollar is cheap and likely get cheaper. It's an election year- while there is uncertainty as to who will lead the country, it's universally accepted that you can't do much worse. Election years are also known for overspending so that those in power stay there. So, you may have 1% growth in the 1st Quarter, but come the 3rd and 4th Quarters the numbers should be much better. The national housing market is expected to recover either in late 2008 or 2009, so whatever drag it may have on our market is unlikely to last for much more than a year.
So what of 2008 for Manhattan? More of the same, I believe. It's hard for the Manhattan market to have a price correction with low rates and a cheap dollar. Price growth could be limited to 5-10%, and volume will likely be level. I don't believe the market will be too hot or too cold. In many ways, this kind of market is more civilized and easier to participate in. While by recent standards level sales and slowly rising prices could be considered a pause, I believe it will prove to be an opportune time to buy.