In turn of fortunes, NYC's high-end market rallies, while lower end stays cool
The economic downturn continues to batter the middle and lower classes. New York City’s unemployment rate is over 9 percent, and of the 10 occupations expected to have the largest number of annual job openings in New York City through 2014, only two offer median wages greater than $28,000 a year, according to a recent report by the Manhattan-based Center for an Urban Future.
“I think it’s gotten harder and harder for low-income individuals to rise up to the middle class in New York. The recession has made it even more difficult,” said the director of the center, Jonathan Bowles.
By contrast, Manhattan has more than its share of the world’s richest people. According to a recent study by Wealth X, a Manhattan-based wealth research firm, New York State has more than 7,300 individuals worth more than $30 million — second only to California, which has 9,800 of these superrich.
“I think that in many ways the last couple years has been a tale of two cities,” Bowles said. “You walk around in Manhattan and you see standing-room crowds for top restaurants. It’s perplexing, given that there is real [economic] pain being felt around the city.”
While workaday New Yorkers continue to struggle, the ultra-wealthy have been diving back into the Manhattan real estate market with a vengeance, creating a rash of eight-figure residential deals late in 2010. Last month, for example, the late socialite Brooke Astor’s duplex at 778 Park Avenue went into contract for about $20 million — after sitting on the market since 2008 — while penthouse 52A at Trump International at 1 Central Park West traded hands for $30 million.
And now that Congress has approved an $801 billion package to extend Bush-era tax cuts for high-income taxpayers, the superrich are likely to continue their real estate buying spree in 2011. That’s a shift from last year at this time when many first-time homebuyers were purchasing property, spurred by federal tax credits, while the luxury market took a hit with high-end buyers reluctant to venture into an uncertain market.
Very wealthy buyers are now pouncing on discounted properties, while much of the first-time homebuyer demand has slowed. As a result, brokers here are noticing a phenomenon they call “billionaire inflation”: A very small percentage of triple-mint properties are seeing their prices escalate, while the rest of the market remains lukewarm.
This rapid shift, along with the other dramatic changes in the market over the past year, has led to a second wave of firm closures and openings in the industry. In 2009, firms that focused on luxury sales, like Coldwell Banker Hunt Kennedy and JC DeNiro, were among those that shut down. Now, firms that rely on rentals and entry-level sales are the ones struggling. And a bevy of new firms — many of them with innovative new business models and a focus on luxury buyers — are now opening up.
One building that isn’t struggling is 15 Central Park West. Developed by brothers William and Arthur Zeckendorf, the Robert A.M. Stern-designed condo has lured the city’s wealthiest residents since its inception. Even during the downturn, buyers there are selling their units for hefty profits. This month, The Real Deal took a close look at all of the 2010 sales in the building, using city data, published reports, and the listings aggregator StreetEasy to capture a slice of life at the so-called limestone Jesus.
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