It's a real estate rule of thumb: during economic recessions, co-op apartments are generally more popular than luxury condominium listings. The ostensible reasoning is that co-ops -- which demand more money down and involve what is often a painfully rigorous screening process -- are less volatile than condos. That is the rule of thumb, anyway. But a new report in The Wall Street Journal thumbs its nose at that particular rule of thumb by pointing out that, during the recent/ongoing recession, the market for NYC condos has been notably stronger than that for Manhattan co-ops. While this was especially true for luxury condo listings at the higher end of the condo price spectrum, it's more or less true for all Manhattan condominium listings. The big question, of course, is why.
The answer, for those who love vagueness: The Economy. More specifically, the Journal's Brittany Hutson writes, the decline of the financial sector has meant a decline for the financial sector's favorite Manhattan real estate property, the luxury co-op. "The gap between condos and co-ops partly reflects changes in demand," Hutson writes. "Foreign luxury buyers, a big part of Manhattan's luxury market, continue to buy and tend to favor condos because they're easier to acquire. But high-paid executives in the finance industry, traditionally a big part of the market for luxury co-ops, aren't spending as much and are buying less. Those who remain in the market are having trouble meeting the stricter guidelines of the notoriously picky co-op boards."
Co-op boards, ruining everything as usual. While the "absorption rate" -- a fancy way of saying how quickly the Manhattan real estate listings in question get sold -- between condos and Manhattan condominiums become roughly equal around the $1 million mark in price, the market for higher-end Manhattan condos remains remarkably strong, given the still parlous state of the economy, both in New York City and in general. We reported on the booming market for high-end NYC condos last week, but if that story seemed to buck the general economic trend, this one... well, it bucks it harder. Whether the credit goes to international condo buyers or just New Yorkers who recognize how strong an investment a Manhattan condominium actually is, the facts are increasingly -- if surprisingly -- clear: the market for NYC condos is as strong now as it has been in some time.