The downtown Manhattan real estate market has gone though a series of ups and downs in past years, but clearly, nothing in recent memory has affected it as drastically as the September 11 terrorist attacks. The aftereffects of the attacks on the World Trade Center have reverberated in the months since, disrupting the lives of those already living in Lower Manhattan and raising questions about the area's future. Early assumptions were that most people would leave and move to other parts of Manhattan or get out of the city altogether. But that mass exodus many were expecting never really happened, and in the time since the attack, realtors and real estate brokers have seen the market change dramatically. So what did happen, and where is the market now?
According to Veronica Raehse of the downtown offices of Bellmarc Realty, "The cycle has been extreme and drastic. Last year it was much slower. But September 11 brought things to a grinding halt." Raehse points out that the closer to Ground Zero properties were, the more profound the change immediately after the attacks. The market began to pick up around November however, when Raehse believes it was about 80 percent of normal. By December, sales activity was back to 100 percent of normal, and by January, it surged to 110 to 120 percent of normal. February and March saw an astounding 150 percent of normal activity. "It was frenzied and out of control," says Raehse. By April, sales slowed a tad, edging back to 120 percent of normal.
According to Raehse, "Anyone with property on the market on September 11 who remained a motivated seller after the attack immediately did a price reduction of five to 15 percent. I haven't seen this happen in years." Sellers and owners closest to the ruins, such as those in Battery Park City, hunkered down to wait if they didn't have to sell right away. The Battery Park City market was slower to rebound. According to Raehse, the areas in close proximity to Ground Zero lagged about four to five weeks behind the pace of the rest of the market, says Raehse.
The price reductions and low interest rates fueled the November purchase increase. According to Jim Gricar, managing director of the Corcoran Group, "The market was in full force in January. In November and December, potential buyers felt prices in downtown areas might be discounted." By January, however, there was such a frenzy and people no longer wanted to wait for prices to go down - instead, they were wary of prices on the rise. Currently, says Gricar, "Prices are at or exceed last April's levels." Inventory is still low, however.
Now, according to Raehse, the age-old agony of New York City real estate is back: there are too many buyers and not enough product. "A good apartment priced right might receive seven to ten bids at an open house. A property can come on the market and in three to five days, it's gone," says Raehse. While many people are holding on to what they have, however, there have also been reports of apartment owners selling their property in favor of renting again. While the appeal of a less entrenched commitment might appeal to some, this doesn't seem to be the order of the day.