To understand the fundamentals of any market, one has to take a look at its statistics and judging by Manhattan’s data points, it’s clear that the City is home to one of the strongest real estate markets in the world. Here’s why:
Population:
1,619,090 currently inhabit the island with an average of two people per household. In the majority of these homes both people are income earners which increases property equity.
Age Group:
71.8% of the population is between the ages of 18 to 65, which is also the age group most productive in terms of work earning and taxes.
Ownership Breakdown:
There are 847,172 housing units on the island of Manhattan. Two-thirds are cooperatives totaling 192,308 units and one-third is condominiums totaling 64,103. Since cooperative and condominium ownership requires you be financially responsible to own property, this creates a stable real estate market. Under these stipulations, New York City is one of the few places in the U.S., if not the world, that asks purchasers to prove they can afford what they are attempting to purchase.
Cooperative and Condominium Board Application Process:
The board process requires that you show assets, tax returns, and other financial information that confirms you can afford the property. In addition, the majority of co-ops require a down payment of at least 20%. In essence, New York City is a highly under leveraged market from the standpoint of property ownership.
Financing:
Lenders also require that a building be in good financial standing before agreeing to lend on a property. This encourages the board of a building to keep their operations and budgets in order as to not diminish the value of the asset.
Rental Market:
New York City has one of the most strenuous rent to income ratios at an average of 40:1. That requires someone paying $4,000 monthly make $160,000 per year. This further stabilizes the market as even renters are well-heeled. In some cases, buildings or the owners require a guarantor to assure the financial security of a tenant.
The list of the statistics that speak to the strong underpinning of Manhattan’s property market could go on and on. However, the aspects above more than show that purchasing a home in Manhattan is one of “the smartest investments” one could make. Those who own property on the island can afford to own property on the island. That is what makes this market incredibly strong and adverse to long-term economic downturn.