The best way for me to explain living in Manhattan to you is for you to picture yourself riding an elevator down from the 50th floor of a high rise. By the time you reach the ground, you will have heard people speaking at least five languages about topics ranging from philosophy to fashion to Wall Street.
New York Real Estate Where It All Began
The most successful real estate purchase in history was in 1626, when the Dutch bought Manhattan from the native Americans for 60 Guilders, roughly equaling $1,000 dollars today. The current value of Manhattan Island real estate is estimated to exceed $3 trillion dollars. The island has an estimated population of over 1,6 million residents living in a land area of only 23 square miles/59 kilometers, thus making it one of the most densely populated areas in the world.
At the date of publishing, the current median residential property sales prices exceed $1,800 dollars per square foot.
Manhattan real estate was hit moderately by the recession and the New York housing market has been rising steadily since 2011. While housing prices in the rest of America and the world lost well over 50% of their value, Manhattan only dipped 12% at its worst. It is crucial to understand that Manhattan real estate is in effect the safest haven for capital worldwide, or as New Yorkers like to say, if Manhattan is underwater, that means the rest of the word has already sunk. A further example of this invincibility is 9/11; not only did Manhattan swiftly recover from the attack, but Manhattan real estate rose again and never looked back.
Federal Tax Laws and Manhattan Real Estate
However, today, the residential sector is taking a major hit, as the new tax reform law signed in December has produced an immediate negative impact. Federal tax laws will soon limit the amount of money that can be deducted from federal property tax to the US $10,000. This has sent the giants of real estate into a tailspin as the government struggles to clarify who will be able to file full deduction for 2018.
Furthermore, the for-sale market has suffered from this uncertainty. January saw the worst sales activity of properties of 4 million or above since 2012, a 29% decrease from the previous year. Now more than ever, international investors will become more critical to the market since the new tax plan does not affect them the same way as US investors.
So where are the future buyers of New York coming from? How can they be identified? And how do we communicate with them?
It is important to remember that despite the changes tax reform will bring, New York City is still one of the most stable markets in the world, despite any changes that may come its way. Zillow still predicts a one-year forecast of 7.3% growth in housing prices, similar to previous years. As upheaval is experienced globally, the US is a safe haven for real estate investment. In particular, places that experience steady growth like NYC are a great place for foreign investors to “park” capital. As their own countries experience turmoil, international buyers can be sure that any money they put into Manhattan real estate will be there when they get back.
Western Europe and China
It may be obvious that China has been and will continue to be a major player. Interestingly, London has just surpassed New York as the number one city for foreign investment. You may think this is bad news for New York, however, that means that Londoners themselves will be priced out of the market and looking for a cosmopolitan city like their own. Furthermore, all of Western Europe is reeling from the massive influx of population from the Middle East and would normally look to London. Due to the imminent inception of Brexit and London becoming pricier, however, Europeans looking for cosmopolitan places to live will be drawn to Manhattan.
Remember that elevator ride? Manhattan will continue to be a massive hub for people from all different backgrounds and all different interests. Even if, at the moment, the market may be slow, there will always be new buyers from all over the world coming to Manhattan to live, work, and experience the lifestyle of living in a vibrant, bustling city.