Oct. 2, 2008 - Manhattan as 'different' (not unique) / counting geniuses + immigrants
a reflection, not a rigorous analysis
I am not a card-carrying member of the Manhattan Is Unique So Real Estate Price Will Never Come Down party, but I have audited classes in the Manhattan Market Is Different school.
I noted with interest an article about the number of MacArthur Foundation grants to Manhattan residents when the NY Times reported on that last week (September 26: A Genius on Every Block? No, but It Seems That Way), which lead to the kernel of an idea about a blog post, which got overlooked in the press of the Business and Life Continuum. I was thinking aboutabout how this article about Manhattan-as-magnet-for-talent had real estate relevance. posting
But what spurred me to actually use bandwidth and time to address this was this piece reported yesterday on-line in the national REALTOR® rag (and sourced to Forbes) about some cities losingtheir attraction for immigrants (Where the Melting Pot Has Frozen). Sort of the other side (or another side) of the same coin.
on the one hand, a draw
Clyde Haberman of the Times points out that
with less than 3 percent of the United States’ population, the city reaped 32 percent of the awards. This year’s share was higher than usual, but not wildly so. Typically, there are 25 MacArthur fellows each year. Last year, 7 were New Yorkers. Ditto for 2006.
Officials at the foundation say that geography is not a factor in the selections. Nor do they keep track of where the winners come from, said Daniel J. Socolow, director of the fellows program. Nonetheless, a look at the winners lists going back to 1981 suggests that, on average, New Yorkers account for about 20 percent. That’s way more than our fair share.
As Haberman explains about these so-called "genius" grants, MacArthur officials frown on the word “genius,” leaving it to journalists and assorted other hacks. Rather, the foundation says that it looks for women and men who are able to “transcend traditional boundaries,” who are risk-takers even in the face of obstacles, who can “synthesize disparate ideas and approaches.”
I have said repeatedly the one of the things that makes our local real estate market different from others is that Manhattan has always been a magnet for creativity, ambition and entrepreneurship. In the context of a city deemed to be safer and more 'livable' by people with huge wealth or income who used to move to the 'burbs, that has definitely helped create demand for scarce Manhattan housing. Add the globalization of wealth and travel to that creativity-ambition-entrepreneurship magnet, and there is yet another different strand increasing demand.
Haberman put it poetically, in historical terms:
What the MacArthurs reinforce is something that has been true almost since the days when Henry Hudson was a sailor and not a parkway. It is not so much that New York breeds brilliance as that it is a natural magnet for creative and daring types. It has a vast array of cultural and scientific institutions and opportunities. For similar reasons, California and Boston, including Cambridge and its fancy colleges, usually lay claim to a disproportionate number of MacArthur fellowships.
(I HEART Clyde.) Note that, in my opinion, neither Boston nor California have other attractions to a global market that Manhattan has.
Of course, these kind of attractions are both ephemeral and fragile. There is no reason to assume that they will continue to make Manhattan a different real estate market indefinitely, and it may be hard to predict when an accumulation of 'bad news' will hurt the Manhattan 'brand' enough to make a significant difference. But I see that situation holding, at least until we see more and deeper bad news on a systemic basis.
(snobbery, admitted
Yes, Haberman talks about MacArthur grants to city residents, rather than to Manhattan residents. But I am enough of a Manhattan snob to assume that the bulk of "city residents" who win these grants are Manhattan-based, either as residents or workers. [Go ahead, prove me wrong.]
I don't think it much matters for my general point, however.)
on the other hand, not so much
Not only do other cities generally lack the creativity-ambition-entrepreneurship magnet that Manhattan has, but other cities are losing the degree to which they are attractive to immigrants at all, at least according to Forbes. As reported on-line by REALTOR.org,
The U.S. continues to be a nation of immigrants, but the heartland cities that were destinations for immigrants in the 20th century are no longer attractive to today’s newcomers.
They don't mention New York, which still seems to be a magnet for immigrants based on everything I have read. (No sourcing here, but I recall reading that New York City's recent population growth is entirely attributable to in-migration of foreign-born and increased birth rate among recent immigrants.) But they did count the cities with the lowest percentages of foreign-born residents:
Here are the top-10 cities with the lowest number of foreign-born residents as of 2007, according to a Forbes magazine survey:
- Pittsburgh, 3.1 percent
- Cincinnati, 3.5 percent
- St. Louis, 4 percent
- Indianapolis, 5.4 percent
- Cleveland, 5.6 percent
- Virginia Beach, Va.. 5.6 percent
- Kansas City, Mo., 5.9 percent
- Columbus, Ohio 6.3 percent
- Nashville, Tenn. 6.7 percent
- Milwaukee, 6.8 percent
Once again, my man Clyde hits it on the nose:
As a footnote, in the endless debate over immigration, you could cite the MacArthur program as evidence that the United States, for all its troubles, remains the place where many of the world’s brightest want to be. This year’s winners, all of whom must be citizens or residents of this country, include people originally from Nigeria, Russia, Croatia, Egypt, Tanzania, England and Canada.
... Nearly all the New York [MacArthur] winners ... came here from somewhere else.
so what?
So, this won't prevent a decline in Manhattan real estate values -- if that is what general and local economic trends have in store for us -- but these related factor do provide some additional (unique?) layer of insulation from the otherwise cold that our market may feel. Call me Pollyanna if you like (so long as you call).
© Sandy Mattingly 2008
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