Diminishing Middle Class in NYC Term Paper
- Length: 17 pages
- Sources: 13
- Subject: Urban Studies
- Type: Term Paper
- Paper: #95670158
Excerpt from Term Paper :
Diminishing Middle Class in NYC
If we look at the Lower Manhattan, it won't take us long to notice the change that has taken place in it in the last 10 years. The population especially the residential population has doubled up in the last 10 years as there has been an addition of 30,000 residents who are now living in Manhattan.
The main reason behind this sudden and huge growth in the population is the trend of construction that has taken place in Manhattan. This trend has led to the production of new as well as the conversion of the old buildings into new luxury housing. For this reason the living costs of the area have increased a lot and the previously affordable residential areas in the city have become some of the most expensive ones to live at. Also, the areas that used to be affordable to live in due to the protection that they provided also seem to be losing some of that protection. Even the rental units that are present in the neighborhood are some of the most expensive ones in the city.
Yes, the city has developed a lot and its infrastructure has improved a lot but at the same time we need to keep in mind the fact that due to all these developments it is becoming more and more difficult for the original residents of the city who helped in building this community to live there (MCB, 2011).
The buildings that are catering to the middle and lower income groups are mostly rentals with lotteries and waiting lists that are so long that there are hardly any people who are taken off of them. While we were researching this guide, we realized that our companies and organizations that carry out the process of tenant selection and eviction needs to be a lot more transparent. It's the management companies that are actually held responsible for providing the low and middle income tenants with the affordable housing with the help of the annual income certifications. However, the completion of these certificates depend on the actions that are taken by the oversight agency involved (MCB, 2011).
For the development outside the CB1 area some groups do benefit from the diversity of income. For example, it was once intended by the Battery Park City Authority (BPCA) to allocate 20% of its housing to the tenants belonging to low income groups. However, today the only low income groups that are being supported by this agency are the ones that are located outside of BRC and the CB1 area with the help of the income that is being given by them to the New York City (NYC).
The funds that were allocated by the federal government towards the rebuilding and re-establishment of the Lower Manhattan after 9/11 are mainly benefitting affordability in the Lower East Side and the Chinatown (MCB, 2011).
Over View of New York Rental and Sales Market
Due to the low interest rate, increased foreign investment and the continued decline in the inventory the sales volume as well as the prices of the Manhattan real estate remained relatively steady throughout the second quarter of 2012 (Higgins, 2012).
According to a report from the StreetEasy.com, $840,000 was the median sale price for the second quarter which is approximately 2.4% more than what it was during the same period in 2011 (Higgins, 2012).
A relatively flat pricing is also being indicated by the city's largest brokerage firm, where one of them is showing the median dropping by 2.5% whereas, an increase of 1-2% is being shown by the other. According to Corcoran Group report, as compared to the previous year the sales volume is higher, in fact it has doubled since the first quarter of 2009 when the sales dropped to even less than 2,000 (Higgins, 2012).
According to James M. Gricar, who is the general sales manager at Halstead Property, "A lot of people have become confident again due to the stability of the prices in the past few quarters." He further says that, "Due to the high rental market and the low rates the condition are very good and all this has led to a very healthy, stable and optimistic market environment for the brokers." (Higgins, 2012)
According to the new numbers as well as the evidence that is being collected it seems like the national housing market has started to recover finally. However, according to Jonathan J. Miller who wrote Prudential Douglas Elliman's report and is also the president of the appraisal firm Miller Samuel said that, "It was the New York market that the national market was behind and the New York market started to stabilize early 2010 and is still moving sideways." He further says that it's the city that has benefitted the most from the foreign buyers as compared to the States housing market and that it was the tight co-op approval standards because of which the foreclosure rate in Manhattan remained low (Higgins, 2012).
It was the lower and the upper reaches of the market where the sale price was healthier. The sale price of an average condominium was high. This could also be noticed from the Brown Harris Stevens and Halstead Property that was showing an increase of 8 million as compared to the last year (Higgins, 2012).
It was noticed that the average price of the co-ops that were sold during the second quarter were slightly less than the same period in the last year. The main reason for this slight decline was the shift in the trend towards the entry-level apartments such as the studios and one-bedrooms. The drop that was shown in the Corcoran Report was of about 5% drop to $640,000. The market share of the studio and the one bedrooms has been above 50% for the third consecutive quarter, the reason behind this was the rising rents and the low mortgage rates (Higgins, 2012).
According to the StreetEasy.com a decrease of 5.9%, as compared to the same period in the last year was noticed, and it was noticed that the decline in the overall inventory was up to 14,254 apartments. In case that this trend continues it could result in rising demands which would ultimately increase the prices further. According to the StreetEasy.com as compared to the same period in the last year the number of price cuts was down to approximately 19.8% (Higgins, 2012).
It was reported by the StreetEasy.com that listings of more than 3400 went into contract in that quarter, this accounts for about 20.7% increase as compared to the previous year. According to the brokers, this increase was due to the low interest rates, increase in the demand, a continuous interest of the foreign investors in Manhattan as well as the limited inventory (Higgins, 2012).
According to Dottie Herman, who is the chief executive of Prudential Douglas Elliman, "This enthusiastic trend is expected to continue on to the early part of the summer (Higgins, 2012).
According to Hall F. Willkie who is the president of Brown Harris Stevens Residential Sales, "there are still some listings that are moving more quickly than the others. However, this increase in demand doesn't mean that the seller can ask for whatever price he wants." (Higgins, 2012).
Overview of Submarkets Rental and Sales
During the past quarter a drop in the prices was observed in most of the neighborhoods by the Manhattan New Development market. This decline was seen both regards to the price per square foot as well as sales price. The increase in the rental market can be made responsible for these decreases to a certain extent. Although, it is being said that the economy has started to recover once again but the people are still reluctant towards buying property as they believe that we are still in an "unknown territory." Therefore, many of the people feel safer in going for the rentals rather than buying.
Due to an increase of 37 units being sold the sales increase by 11% from those of the last year. In the light of this increase it can be seen that over a period of three months 379 units were sold. This makes the total amount of the new development sales to come up to 4 new sales each day. In Harlem the sales prices ranged around $200K whereas, the prices went as far up as $13 Million in Greenwich Village (MNDR, 2012).
If we look at the sales prices of the past year we notice that they dropped approximately 30%. In the third quarter of 2011 the amount of dropped sales was $1.5M whereas, in the past quarter the amount was $1,075,00. As compared to the last year quarter per square foot price has dropped from $1,243 to $1,062 which makes this decline about 15%. There was a drop in the price of only 2% on the basis of quarterly sales from $1,099,855 to $1,075,000. A decline of 9% was seen in the price per square foot as…