| Until the last few months, the Manhattan condo market | | | | Manhattan condo prices that could favor buyers for |
| had been largely immune to the plunge in real estate | | | | another year at least. The Real Estate Board of New |
| values that has plagued most real estate markets | | | | York has said that 11,023 condo units now under |
| around the country. Luxury Upper East Side | | | | construction will be ready for sale by the end of 2010. |
| condominiums and Manhattan new condos elsewhere | | | | Tough Financing Options for Manhattan Condominiums |
| on the island held most of their value as the unique | | | | Yet another factor driving down Manhattan condo |
| nature of Manhattan’s economy and real estate | | | | prices is the difficulty condo buyers are having with |
| market insulated them from the housing bust. | | | | obtaining mortgage financing. Jumbo mortgages that |
| However, in the second quarter of 2009, that insulation | | | | exceed $729,750 exceed the loan limits of conforming |
| melted away. Manhattan real estate professionals say | | | | loans backed by Fannie Mae and Freddie Mac, and |
| that during the three months that ended on June 30, | | | | most Upper East Side condos are priced very near or |
| 2009, condo prices fell between 13 and 19 percent with | | | | over that limit. Skittish lenders are asking borrowers of |
| median sales prices ranging from $795,000 to | | | | jumbo loans to put steep down payments of up to |
| $849,000. This represents a significant shift from the | | | | thirty percent on modestly priced condos and up to |
| first quarter of 2009 when condo values ranged from | | | | fifty percent on high-end luxury Upper East Side |
| a modest two percent loss in value to respectable | | | | condos. This has understandably driven condo buyers |
| gains of up to six percent compared to the first | | | | to Manhattan condos on the lower end of the price |
| quarter of 2008. | | | | spectrum. |
| Manhattan Condo Buyer’s Market on, Right Now | | | | Condo Sales Picking Up |
| The uncertainties of the current Manhattan condo | | | | Naturally, when market conditions favor buyers |
| market have temporarily driven many of the | | | | wanting to buy a condo for their primary residence |
| speculators away from investing in condos and condo | | | | rather than an investment, more buyers enter the |
| development projects. Investors who bought condos | | | | market. According to one Manhattan real estate |
| at relatively low “preconstruction” prices to turn | | | | professional, condo sales jumped by more than 28 |
| a tidy profit when the condos were ready for | | | | percent in the second quarter of 2009 as buyers |
| occupancy have largely abandoned these investments | | | | sensed the bottom of the market was near. She said |
| for the moment. Another favorable facet of current | | | | that lower-priced one bedroom and studio condos |
| condo market conditions for buyers is the fact that | | | | dominated the market and led to the surge in sales. |
| wealthy people who bought Manhattan condos as tax | | | | "It's value-based shopping. People are coming back into |
| shelters for their money can no longer write off losses. | | | | the market, but nobody is going to overpay." |
| Under new tax guidelines, it is no longer possible for | | | | A Fleeting Opportunity |
| investors to write off more in expenses than what | | | | While the Manhattan condo market is somewhat |
| they receive for rent on their condos. Rents on | | | | immune to the up and down cycles of most real |
| Manhattan condos have plummeted in the last year | | | | estate markets, the window of opportunity for buyers |
| and what looked like a steady stream of income for | | | | will not remain open for long. Unlike most major |
| investors has become a liability. | | | | American cities, New York City’s population is |
| Huge Inventory of Unsold Manhattan New Condos | | | | growing. As more buyers take advantage of current |
| The steadily increasing value of Manhattan new | | | | market conditions, the availability of lower-priced |
| condos fueled a condo development frenzy over the | | | | Manhattan condos shrinks and prices inevitably rise. |
| last several years and developers were putting up | | | | Since there is little Manhattan new condo development |
| new condo buildings as quickly as they could. | | | | currently under construction due to tight credit and |
| Nevertheless, the nature of the business is that | | | | wary investors, the condo market is expected to |
| development lags behind demand, and when the | | | | tighten in the near future. When that happens, investors |
| economy began to flag in 2008, new condo buildings | | | | will once again have the upper hand, well-informed |
| were too far along in the development process to | | | | buyers will see the value of their investments |
| stop construction. This has led to a glut of unsold | | | | appreciate and cautious buyers who waited too long |
| condos that has also put downward pressure on | | | | will have missed a golden opportunity. |