The following is the text of a speech Adrienne Albert, president of Manhattan real estate brokerage firm The Marketing Directors, gave at the monthly luncheon meeting of Associated Builders and Owners this past September.
I was asked to speak about the residential market. We all know it’s hot. The questions are: How hot and for how long?
In the early and mid ’80s, real estate was hot. EVERYONE was talking about apartment prices and rents. I began to worry about the market when doormen, who were buying apartments to rent out, would ask me for investment advice. We all remember the pain of the recession in the early nineties and the climb back to a healthy market. Well, residential real estate is hot again–everybody’s talking about it. But it’s a different buzz because so little product has been built over the last ten years. This buzz is about supply and demand in a prosperous economy. As Wall Street goes, so goes real estate, and with so little supply and a booming Wall Street, residential real estate is skyrocketing!
Let’s compare today’s condominium market to that of a year ago. We use condominium transfers as a value measure because they are recorded, and the information is in the public realm. This information does not represent sales in our shop, but all condominium transfers. (We disregard bulk sales, and sales that seem to be non-arms-length transactions, and transactions that we feel may be reporting errors.) So, in the first half of 1999, approximately 2,369 units were traded versus 2,434 in 2000, for an increase in volume of less than three percent–very little change. Before you question whether that number of homes isn’t too high, if I remember correctly, there were about 2,500 new for-sale units entering the marketplace in 1984–when prices jumped 30 percent! We were grossly undersupplied then, and we are now.
The dollar volume of transactions in the first six months of 1999 was roughly $1.3 billion, as compared with $1.7 billion for the same period this year–an astounding 30 percent increase, as in 1984!