RE.ality Increasing Hit to Manhattan

Heard On The Street: NYC Won't Avoid Ppty Crunch

(From THE WALL STREET JOURNAL) By Liam Denning When it comes to property prices, that strip of rock just south of the Bronx is often perceived as invincible. Across the U.S., house prices have fallen 19% from their peak, according to the S&P/Case-Shiller Home Price index. New York City, as a whole, is down 10%. Meanwhile, on planet Manhattan, the median price of an apartment rose above $1 million for the first time in the second quarter of 2008, according to Miller Samuel, a real-estate appraiser. But even in Gotham, reality bites eventually. Three big problems are likely to hit in 2009. First up: Job losses on Wall Street. In 2006, the most recent full year of New York State Department of Labor data, finance and insurance companies employed 15.7% of Manhattan's workers. They earned an average of $269,000, more than 2.5 times the average private-sector wage. Property prices will suffer from slashed bonuses and submarine stock options, not to mention the pink slips. Wall Street's woes also mean tighter credit. The Federal Reserve's latest "beige book" survey of financial conditions says this of a softening Manhattan condominium and co-op market: "A growing number of deals are said to be falling through, due to difficulty in getting financing -- largely at the middle of the market." The third headwind is a stronger dollar. Jonathan Miller, Miller Samuel's president, estimates one in three new apartments are sold to foreigners, primarily Western Europeans.