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Downtown Alliance: Manhattan Residential Real Estate Year In Review

We provide the residential real estate market data for the Downtown Alliance.

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Monthly Report on Current Economic Conditions

Miller Samuel was cited for certain real estate market data.

The Condominium v. Cooperative Puzzle: An Empirical Analysis of Housing in New York City

The first version of this paper was written in 2003 and the results were used for a New York Times article on May 4, 2003 titled “So How Much Is That . . . . . . . . Worth?” The paper was presented at several U.S. economic forums during 2003 and 2004 including The American Real Estate and Urban Economics Association Annual Meeting in San Diego, The American Bar Association in New York, The New York University School of Law Faculty Workshop and The American Real Estate Society Annual Meeting in Monterey, California, all to good reviews. After peer review, the paper was updated. The 15.5% premium in the original research was modified to 8.8% in the 7/23/2006 version and submitted for final approval to the Journal of Legal Studies where it was published in the August 2007 issue.

One of the enduring puzzles of New York City's housing market is the persistence of the housing cooperative, despite the prevailing wisdom that condominiums are more valuable than cooperatives. In this article, we examine the theoretical advantages and disadvantages of cooperatives and condominiums, and apply these theoretical insights to empirically test whether there is a price premium attributable to condominium housing. We then use our findings to speculate as to why the cooperative form remains dominant in New York City and whether its dominance is likely to continue in the future. The empirical analysis is based on hedonic models of house values and uses rich data on apartments sold in New York City between 1984 and 2002.

In most instances, theory suggests several reasons why the condominium may be a more efficient and desirable housing form than the cooperative. Unlike the case of cooperatives, condominium owners do not share liability on mortgage debt, they are free to transfer their apartments to whomever they choose, they are subject to fewer rules than cooperative apartment owners and, correspondingly, they need spend less time in internal governance. Our empirical findings confirm the theoretical prediction that legal form does indeed matter. With one important exception, condominium apartments are significantly more valuable than comparable cooperative apartments. The one exception suggests that for some owners, the benefits of restriction and exclusivity that the cooperative form offers, and which until recently seemed to be impossible to achieve through the condominium form, may be utility-maximizing. We speculate that, except for the segment of the market that seeks a socially exclusive residential environment, the continued dominance of cooperative housing in New York City is probably attributable to transaction costs and collective action problems which make switching to condominium form potentially difficult.

An economic review of the Manhattan residential real estate market

We have long been bullish on the Manhattan real estate market and following recent rapid price rises and much talk of a â??housing bubbleâ?? a number of commentators and analysts asked us to revisit our analysis. This is a fresh look at the situation; please refer to our September 2004 report that has fuller coverage of some of the issues we touch on here.


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We provide regular insight and data to the Downtown Alliance for their seminal Lower Manhattan Market Overview. Here is the residential portion of the report. Click on the graphics to open the full report.

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A real estate bubble? An economic analysis of the Manhattan residential real estate market

This report, in its entirety, is now available for download free of charge but Business360 encourages you to contribute to the costs of preparing this work to help ensure further updates. Instructions are available in the report. Miller Samuel has received no direct compensation for participating in this study.


Using sales price data provided by Miller Samuel, Business360 has completed an economic review of the Manhattan residential real estate market. This review extends back some 25 years and gives an historical perspective on valuations of both condos and co-ops.

Using economic data on personal income and interest rates, along with real estate prices, Business360 examined the market on a range of core metrics including price to personal income and affordability. The research company concludes that the Manhattan mass-market is not overvalued and that valuations today are at the low end of historical norms

Business360 point out that since the early 1980s, Manhattan real estate prices have lagged personal income gains and that had real estate prices kept pace with personal income increases, real estate prices would be over double current levels. Further, the decline in interest rates over this period now makes real estate much more affordable.

Why is Manhattan So Expensive? Regulation and the Rise in House Prices

Miller Samuel is cited for data used in this study:

Abstract: In Manhattan and elsewhere, housing prices have soared over the 1990s. Although rising incomes, lower interest rates, and other factors can explain the demand side of this increase, some sluggishness in the supply of apartment buildings also is needed to account for these high and rising prices. In a market dominated by high rises, the marginal cost of supplying more housing is the cost of adding an extra floor to any new building. Home building is a highly competitive industry with almost no natural barriers to entry, and yet prices in Manhattan currently appear to be more than twice their supply costs. We argue that land use restrictions are the natural explanation for this gap. We also present evidence that regulation is constraining the supply of housing in a number of other housing markets across the country. In these areas, increases in demand have not led to more housing units, but to higher prices.

Monthly Report on Current Economic Conditions

Dynamics of Urban Residential Property Prices – A Case Study of the Manhattan Market

Abstract: In a multivariate vector of autoregression framework, this article investigates the weak efficiency of the urban residential real estate market and the cause of weak efficiency. An error correction model is used to estimate long-term relationships among apartment prices and adjustment speed from disequilibrium to equilibrium. Based on a unique dataset of the Manhattan market, the efficiency of this market, seasonal stationarity of property prices, and the weak exogeneity of leading sub-markets are studied. Our results indicate that, in a market of less heterogeneity, and higher transaction volumes, the weak efficiency hypothesis is rejected as in previous studies. This result implies that heterogeneity and lack of transaction information may not be the direct source of market inefficiency. Meanwhile, it is found that there are stable long-term relations among prices of different sub-markets. Interestingly, the price of one-bedroom co-op is weakly exogenous. This implies that the starting co-op for most home buyers in urban areas is a leading indicator of the entire market which contradicts the claim that high-end luxury co-op leads the market.

9/11: Two Years Later, An Analysis of Federal Aid

Monthly Report on Current Economic Conditions

New York City’s Economy before and after September 11

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