Manhattan Loft Guy

Sep. 25, 2006 - unique strengths in the Manhattan real estate market � not just an urban myth?

“everyone” says the Manhattan real estate market is “different”, sometimes they are right

Thursday’s NY Times business section ran a data piece about income inequality in the US, which had a fascinating kernel for the Manhattan real estate market.

“New York, interestingly enough, showed large increases in per capita income both during the Internet boom and the Internet winter that followed”

Income-gain concentration is stark

The thrust of the piece was about how The National Income Inequality Story in the dot-com era was really not a “national;” story at all, but a very localized story. (I guess income, like real estate, is “local”). Two researchers at the University of Texas drilled down to county income data and found that (1) the late-1990s surge in “national” income inequality originated in a very small number of counties, and (2) these very few counties were heavily focused in information technologies.

How concentrated was this surge? If four out of the top five counties in growth in income inequality had experienced only average growth in income inequality, the “national” results would have been essentially flat. That’s FOUR out of 3100 counties.

US income-gain data driven by tech

How dependent on information technology were the top “disparate” counties? Four out of the top five were King County WA (home to Microsoft) and three counties in Silicon Valley (San Mateo, Santa Clara, San Francisco). The fifth county is actually the top county for income disparity in the US: New York, New York – also known as Manhattan.

So … small parts of the country made tons more money than the “average” during The Boom, and then the disparity shrunk with the Bust (what Hal Varian in the Times calls the “Internet winter” – nice locution!).

no internet winter in Manhattan (yet?)

But the boom did not turn to bust in Manhattan – in which income disparity continued to grow after 2000. (Not a lot of post-2000 data, however).

So … because the coop, condo and loft market in Manhattan is driven by money “at the top” (Manhattan residents “at the bottom” are disproportionately renters), the availability of so much money at the top is a rather unusual driver for Manhattan real estate compared to the nation as a whole – especially as that driver persisted in Manhattan after the trend reversed in the metro-Microsoft area and Silicon Valley.

Some data supports local happy-talk

So … it was nice to see some real data suggesting that (at least some of the time) (at least some of) the people who crow about Manhattan being “different” might be on to something. (“Bubble-proof” is another matter, of course.)

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Sep. 25, 2006 - unique strengths in the Manhattan real estate market � not just an urban myth?

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