Does the Manhattan NYC Real Estate Market Flash Warning Signs for other Urban Markets including Denver

It is no news that the borough of Manhattan within New York City is the most expensive housing market in the United States. It is also borough with a vast diversity of incomes, residents and employment. In addition it is the most attractive market for offshore money to invest in real estate.

Thus last week it was quite a shock to some that the median transaction price for an apartment in Manhattan was below $1,000,000 (barely at $999,000) during the 4thQuarter of 2018.

The concern is the $1,000,000 median was broken in the 4th Quarter of 2015 (the median was $1,150,000 at that time) and has stayed above $1,000,000 for three (3) years only to break below $1,000,000 during Q4 2018.

If one factors for inflation that same  $1,150,000 on December 2015 is worth $1,222,800. Thus the median in real inflation adjusted dollars has adjusted downward just shy of ($225,000).

Let’s look at another statistics:

  • Dec 30th, 2015: Dow Jones Industrials: 17,603
  • Dec 31st, 2018: Dow Jones Industrials:  23,327

Thus during the 3 years period the equities market was strong with a gain of over 25% and the Manhattan apartment market stayed above the $1M median.

Thus is Manhattan a precursor of what is to happen in Denver? My gut is yes. While inventory continues to be strained locally what is on the market seems to be languishing especially in the upper-end of the market i.e. $800K+. In addition we are witnessing more conservative pricing which some would argue is seasonal while others believe we peaked concerning home values 12-18 months ago and now are entering a new phase in the market moving towards a buyers market ever so slowly.

Some would argue comparing Manhattan to Denver is like comparing apples and oranges as the two cities have little in common. However Manhattan is historically the most in-demand housing market in the country. For this market to see a close to 25% reduction in the median (inflation adjusted) sales price in Q4 2018 from three years prior is concerning and may provide the caution sign we should all heed around the country.

 

 

 

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