OPW KEY FACTS… USA
“The impact of the global crisis has left the US market recovering very cautiously but there are many opportunities for international buyers.”
Following some of the highest recorded rates of fall in residential values recorded in the US, stats show that by spring 2009 there were songs of recovery in sales rates, prices and new construction levels. However, high levels of unemployment as well as the rising inability to make mortgage payments in both sub prime and prime markets are factors that continue to shed caution on the speed of the recovery process.
NEW YORK
NYC is home to approximately 8.3million residents. Manhattan, the major commercial and financial borough, has a population of 1.6 million alone. The Manhattan housing market comprises predominately of cooperative apartments in older properties, while the rest are condos developed since the 1980’s, usually high rise, townhouses and lofts.
New York, along with LA and Washington DC has not seen the dramatic price falls of other key US metropolitan areas. New York recorded high growth levels in the 2004-06 period and prices in October 2009 continue to remain some 75% above their 2000 levels on average.
2009 was a difficult year for Manhattan’s luxury ($5m plus) property market, coming to a virtual standstill at the end of 2008 and remaining slow into 2009. Momentum grew from the lower end of the market, finally having impact on the luxury segment by spring with an increase in purchasing activity in the $5-10 million range, until supply became limited by autumn that year.
Prices in the luxury segment decline throughout 2009 and now stand at about 25-30% off the 2008 peak. New York vendors reacted quickly to bring prices down and indeed, the only properties that were sold were those priced to reflect these decreases.
At the very top of the market, ‘trophy’ properties in the US $20 million segment also saw some of the greatest falls (more than 40% in some cases) following a period of high speculation, although there remain a few transactions at this level. The luxury condo market fared much better that co-ops because more foreign buyers took advantage of exchange rates and good resale units in the most recent top projects such as The Plaza Hotel, 15 Central Park West, among others.
Currently, the Manhattan market remains fairly active and quality, well priced properties are selling much faster.
FLORIDA
The ‘sun belt’ of the US comprising Arizona, California, Florida and Nevada, had experienced the greatest house price appreciation on average in the period since 2000. As such it subsequently saw the most dramatic downturn in residential values as the sub prime mortgage crisis set in. the continued decline in house prices has nonetheless been met with a rise in transaction levels. By the end of 2009, sales volumes in both existing houses and condos had increased year on year. With owner occupiers taking advantage of tax credits and lower house prices they have been able to get into a housing market from which they has previously been priced out. Indeed across the country the National Association of Realtors reported that between September 2008 and 2009, 45% of sales had been to first time buyers taking advantage of tax credits while distressed sales accounted for 29% of transactions in September 2009.
Florida’s enduring image as a retirement destination for those living in cooler northern climates is also continuing to attract the highly mobile baby boomer generation who are keen to benefit from comparably lower prices, with financing options that are more available than 12 months ago. Similarly, despite the dollar sterling exchange rate not being quite as attractive for UK investors as previously experienced, the fact that values are more than 40% off their peak means that Florida is attracting international interest.
