Global Recession Finally Taking Its Toll on Manhattan Real Estate Market
The Manhattan real estate market fought like a champion, managing to stay buoyant while the national real estate market took it on the chin.
When the real estate market first began to tumble lower, the Manhattan real estate market held firm and even managed to trend higher.
When the subprime mortgage market started to collapse, the Manhattan real estate market held firm, refusing to give up any ground.
When markets such as Nevada, California and Florida started to implode, the Manhattan real estate market did just the opposite.
When the government started bailing out companies and the hedge fund industry collapsed, many expected the worst for the Manhattan real estate market, but nothing happened.
After 12 rounds of sustained heavy body blows, the Manhattan real estate market has finally started to collapse.
According to Bloomberg.com, prices in the seemingly invincible market have now started to take a tumble.
The reason? The collapse of Lehman Brothers and Bear Stearns have finally started to have a noticeable impact.
According to the story, recently released data showed that the median price in the area dropped 18.5% from a year ago.
The article also broke the price drops down by apartment size:
Studios - down 16%
1 Bedrooms - down 17%
2 Bedrooms - down 23%
3 Bedrooms - down 37%
4 Bedrooms - down 47%
The drop has been widespread and has left no prisoners, and many feel as though the decline will continue throughout the rest of 2009.
Many anticipated that the situations with Lehman Brothers and Bear Stearns would have a dramatic impact on the Manhattan real estate market.
The logic was fairly easy to see - many people would simply not be able to afford their Manhattan homes anymore, due to a dramatic decrease in net worth and a possible loss of their jobs.
The Manhattan real estate market has finally buckled, and many people are racing to get out.
The article notes that 32% of Q2 listings in Manhattan included discounts from the original price.
The implosion of Lehman and Bear Stearns were certainly key contributing factors to the sudden collapse. Other factors include:
1. Implosion of the hedge fund market.
2. Continued global recession.
3. Contraction of the credit market (many people just aren't able to get loans as easily as they were before, especially large loans)
4. Decreased wealth abroad.
5. Increased tax burden on people in the state.
With all of these things conspiring against the Manhattan real estate market, it's no wonder that the previously bulletproof Manhattan real estate market finally buckled.
Source: Bloomberg.com - Manhattan Apartment Prices Drop as Lehman Effect Hits Home
Filed under: Real Estate News