Housing Slump? Not in Manhattan

Across the country, home foreclosures are rising. It is taking longer to sell homes and when they do finally sell, they sell for less than they would have a year ago.

To put it simply: It is a bleak housing market.

But there are a few bright spots out there, the most dramatic being Manhattan.

In the last year, the median price for apartment sales on the island went up 14 percent, according to a report by one of the city's largest brokers, Halstead Property. Not everything is perfect in the heart of New York City, but for the most part, the high-priced Manhattan market appears to be faring well.

Manhattan's real estate market has been on fire and for now the nation's subprime woes don't seem to be bringing it down. Fueling the latest increase is a combination of limited supply, strict co-op board building rules about who can live there, Europeans buying property at a discount thanks to a weak dollar and a number of opulent new apartments on the market.

One of the buildings that pushed up the average prices for Manhattan is located on the edge of Central Park, steps away from Columbus Circle.

Dorothy Somekh is a real estate agent, investor and a builder. She owns part of two apartments in the building at 15 Central Park West.

One two-bedroom apartment is on the 25th floor and overlooks the park.

She bought it two years ago, when the building was under construction, for $4.15 million.

"That apartment now, I wouldn't sell for less than 8 [million dollars]," Somekh said.

But she has no plans to sell. Instead, she is renting it for $24,000 a month. Yes, that's right, $24,000 a month or nearly $300,000 a year for 1,745-square-feet of living space.

The building is designed in the classic prewar architecture but has all modern amenities. For instance, the floors in the master bathroom are heated and all the windows are wired for electric shades or curtains.

It also offers private dining services with an in-house chef and catering.

Somekh bought her other apartment on a lower floor without a park view for $2.5 million in the fall of 2005 and is now asking $4.75 million.

"We received several offers but turned them down," she said. "We're waiting for the asking price.

And if a buyer doesn't offer that? "We'll just rent it."

It is buyers like Somekh who are pushing up the Manhattan market.

Halstead Property's chief economist Gregory Heym said that sales at 15 Central Park West and at the nearby Plaza Hotel were responsible for pushing up the average sale price 34 percent to $1.4 million. The median price increased 14 percent to $828,000.

Across the country it is a very different story.

Home builders are now selling new homes at a pace that's 34.4 percent below the rate of a year ago.

And those homes are also selling for less.

The Standard & Poor's/Case-Shiller home price index released last week found that through October, home prices in its 10-city index had their biggest monthly decline on record, dropping 6.7 percent compared with a year ago. The previous record of 6.3 percent was set in April 1991.

Among the larger 20-city index, home prices dropped 6.1 percent.

"No matter how you look at these data, it is obvious that the current state of the single-family housing market remains grim," said Robert J. Shiller, chief economist at MacroMarkets in a press release.

Miami, once home to real estate speculators and now a lot of empty condos, had the biggest drop of the 20 markets surveyed. There, home prices fell 12.4 percent on average in October 2007 compared with October 2006. Tampa had a price drop of 11.8 percent. Economically challenged Detroit saw home prices decline by 11.2 percent.

Only Charlotte, N.C., Portland, Ore., and Seattle showed any signs of price increases.

Even the New York metro area went down and other boroughs of New York City aren't faring so well. It is just Manhattan, home to some of the most expensive real estate in the country, that is growing.

Heym, Halstead's economist, said there are several reasons why Manhattan is doing well.

First, there is not an abundant supply of available apartments. Those new apartments coming on to the market are getting swept up and Manhattan, after all, is an island and there is only so much land to build on.

Another key factor: the quirky nature of many buildings in the city. To live in many buildings, particularly co-ops, prospective owners need to go through a rigorous review by the building's board. This includes reviewing a buyer's finances.

Often these buildings require large down payments. Some exclusive properties on Park or Fifth Avenues even require that the entire cost of their multi-million dollar unit be paid in full, in cash. Others prohibit adjustable-rate mortgages that got buyers elsewhere in the country into trouble.

"Many people credited co-op boards with doing the work that lenders didn't do," Heym said.

Finally, many Europeans are buying high-end properties in Manhattan.

As the value of the dollar falls, property here is cheaper for them. Heym said they are not only buying more apartments but choosing larger, more expensive ones.

Still not convinced of what an anomaly some of these apartments are?

Consider this: A loft in Greenwich Village is on the market. It includes a private elevator, wood-burring fireplace, an 1,500-bottle wine room, steam-shower and a rooftop garden with an outdoor shower and kitchen. So what does this three-bedroom, three-bathroom apartment go for?

A mere $9.25 million. And if you buy it, you will also have to pay $25,000 each year in maintenance fees.