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[Conspicuous Consumption is A1] Manhattan Housing Slump Hits NYT Front Page

Last week we released our Manhattan Market Overview [1] for Prudential Douglas Elliman [2] which outlined the fall correction and emergence of a new market. Apparently this topic continued to resonate and was worthy of a front page New York Times article. Josh Barbanel wrote a harsh, but good one: Housing Slump Hits Manhattan [3].

Apartment prices have once more become the talk of the town in Manhattan, but this time the talk is of uncertainty and falling numbers. While brokers say they are seeing more activity lately, especially from first-time buyers taking advantage of lower interest rates, housing analysts are predicting a prolonged slump in prices and sales that could last as long as four or five years.

Hey who was that housing analyst they referred to? I think I know him? This is my 9th time on A1 (but who’s counting?) and it’s always a thrill. My last time [4] I thought it was 9, but it was only 8 – good grief this is shallow – ok, I’ll stop.

In Manhattan, real estate is more than a spectator sport and was the last or one of the last US housing markets to see weakness. High end is expected to feel more pain and first time buyers and sub-million dollar sales are the big story at the moment.

Jonathan J. Miller, an appraiser who prepares quarterly reports on Manhattan, said the market could continue to fall through this year and next, especially if credit remained tight for most buyers. After that, he said, it could take several more years to work through the excess inventory.

Both inventory and “shadow” inventory – the newly constructed or converted housing units ready for sale but not offered yet – probably in the neighborhood of 6k to 8k units.

The article ended with this thought:

Mr. Miller said that during the last big real estate downtown, when studio apartments were so cheap that he considered buying one on a credit card, people thought the luxury market would never come back. “Conspicuous consumption was out of vogue in 1991,” he said. “The market was back by 1997 or 1998.”

In other words, so many market participants characterize these periods as “forever” when they’re really not – housing is cyclical so get on with it.