Not all real estate booms are created equal, according to the real estate professionals. During the 1980s and 1990s, real estate prices jumped higher and faster than the current price increases, according to Town Residential’s founder, Andrew Heiberger. Heiberger knows New York City like the back of his hand. Heiberger started Town Residential because there wasn’t a luxury-focused real estate company in New York. Heiberger likes to make deals where the air is rare in the city. That is, he and his cable group of high-end brokers are in the multi-million dollar plus market, and there is a ton of properties that fall into that category these days.
In the 1990s, prices increased by 84 percent, and prices jumped by 116 percent during the boom of the early aughts. This time around, prices have only increased 19 percent since the first quarter of 2013, according to Town’s Chief Operating Officer, Jacqueline Pestana. Pestana and Town’s sales operation manager, Lauren Dub, think this real estate boom is still in its infancy even though prices hit a wall early in 2016. There is also concern that interest rates are artificially low and developers seem to pay ridiculously high prices for land these days to build more luxury buildings.
Town Residential has been working in the luxury real estate market for more than five years. The company’s four offices around the city still have a long list of buyers that are from countries around the world. That’s why Heiberger and others say this boom is built on a solid foundation. New York City has become a mecca for international buyers. They want to own property in New York because New York has reinvented itself. For example, 42nd Street is no longer a nasty drug haven, and the wealthy don’t just live on the Upper East Side. The city looks cleaner, and it feels different from every other city in the country. It is a multi-cultural experience, and wealthy international buyers want to be part of its growth, according to one of Town’s managing directors, Ryan Fitzpatrick.
The old real estate boom in 2004 was built on loose credit, but that’s not the case now. Inventory is low on established properties, but the luxury market listings are expanding because of the development of new expensive buildings around the city. Areas like Chelsea and lower Manhattan now have high price real estate listings. Buyers are paying cash for expensive apartments and condos all over the city. The average price for new development was $2.5 million in 2015, and that is 30 percent higher than the new development price of $1.9 million in 2007, according to one of Town Residential’s sales directors, Karen Gastiaburo.
Prices are increasing slower than they had in the past, and Town Residential brokers say that’s a good thing because the faster prices increase, the faster they fall. Heiberger said that real estate booms have a tendency to mimic the stock market, and that is true this time around. It looks like this real estate boom seems to have no ceiling.