Amid fears about the sagging economy and war in the Middle East, the New York real estate market started slowly at the beginning of 2003. But in true New York fashion, the market rebounded nicely and by the summer months was thriving. By year's end, Manhattan property was hotter than ever.
According to data compiled by Yale Robbins, Inc. and published in the company's monthly Condo Sales Report, the numbers in 2003 were impressive; there were 1,520 one-bedroom, 1,023 two-bedroom, and 406 three-bedroom apartments sold in 2003, for a grand total of nearly $3.5 billion in sales. By comparison, 2002 saw the unloading of 1,599 one-bedrooms, 958 two-bedrooms, and 526 three-bedroom apartments, for just over $3.5 billion altogether. By the end of 2003, the average price of a co-op or condo apartment in Manhattan was $850,745 - nearly identical to 2002's final average of $852,410, but with slightly higher prices per square-foot: $724 in 2003 versus $684 in 2002.
Jacky Teplitzky, executive vice president of Douglas Elliman, a Manhattan brokerage firm, saw a tale of two halves in 2003. The market remained steady during the first half but prices did not rise to double digit-numbers. "We had a very strong market in studios and one bedrooms in the first half of the year because interest rates were so low and people could afford more apartment for less money. Interest rates were around 5 percent for the first half of the year." And by the fourth quarter, says Teplitzky, the average sale price of a Manhattan apartment had risen by 11.7 percent.
"Without a doubt we can say it's the interest rates that are fueling the economy," agrees JoAnne Kennedy, president of Coldwell Banker Hunt Kennedy. "The biggest surprise to everyone is that the housing industry has remained so strong."
Gregory Heim, director of research and chief economist for Terra Holdings, which owns both the Halstead Company and Brown Harris Stevens brokerage firms, agrees. "I'd say that particularly in the second half of 2003, the market was exceptionally strong. Interest rates have remained favorable, and the economy has started to come back. The city has finally come out of a two-year recession during which it shed 200,000 jobs, so if a market can continue to grow while you're losing that many jobs, obviously people are very optimistic about what can happen."