The Future of the Luxury Housing Market in New York City

For a little over a year now, the strength of theover the past quarteror so, though prices have
New York City realestate market has been anot dropped. Pricing in housing marketsoften
stark contrast to the national market. Asthingsfollows changes in the volume of activity, even in
worsened across the country, the news wasthe luxurymarket.
either great or justWeighed against this change, however, is the
OK for New York City.weak dollar, which hasdramatically increased
As the market finally started to show signs of itsforeign demand for luxury New
own mortality towardsthe end of 2007, theYork City apartments.
overall numbers were still fairly positive. TheluxuryIn addition, the strong end-of-the-year bonus
housing market was propping the rest of theseason will continueto bolster the spending plans
city's market up.of wealthy families in the city throughoutmuch of
Most luxury markets are typically well-removedthe year.
from the business cycle,so it came as littleWith supply and demand both in relatively strong
surprise that, even in the wake of theplaces, it is difficultto see a severe drop off in
financialmarket's problems, the luxury apartmentprices in the luxury market. For instance,the credit
market held up well againstthe national downturn.crunch, for instance, has led many banks to
What was a surprise however, was just howtighten theirlending standards, according to a
strongly the market performed.recent study by the Federal Reserve.
Several new buildings full of luxuryHowever, few, if any, of those looking to
Manhattanapartments opened, andaverage pricespurchase luxury New Yorkapartments do not
for the luxury market continued to climb.have sufficient credit or collateral to secure aloan.
As the economy sinks further into a recession,That's not to say interest rates will not increase,
and as the news ofeven in the wakeof the Fed's strong interest rate
Bear Stern's demise spreads, worries arecuts. But it is unlikely that anincrease in rates will
beginning to mount over justhow long the luxurydramatically harm demand for housing among
New York apartment market can keep it up.thewealthiest members of the world's richest city.
Market activity, by most accounts, has slowed