Could apartments in New York City get any smaller? I guess so… Mayor Bloomberg recently announced a competition for architects to submit designs for mini-apartments measuring just 275 to 300 square feet (25.5 to 28 square meters or half the size of subway cars in Manhattan) to address the surge of demand for studio and one-bedroom rentals. As part of Bloomberg’s “New Housing Marketplace Plan,” a program to finance 165,000 new and renovated units of below-market affordable housing by the end of the 2014 fiscal year, the city is seeking to create an entire building of studio apartments, smaller than what is allowed under current regulations, at 335 East 27th Street, near First Avenue. Bloomberg will suspend zoning regulations to test the housing model at a city-owned site in the Kips Bay neighborhood. These micro apartments must have a window and a kitchen and are aimed at young professionals in the city while they start their careers. Design submissions are due by mid-September, and the apartment design is scheduled for approval in 2013. The apartments, once built, will be sold or rented on the open market. The city will not be subsidizing the project. If successful, this project could help usher in a loosening of the city’s zoning laws regarding minimum housing size.
As for the rest of Manhattan, real estate prices and sales volume continued to hold relatively steady in the second quarter of 2012, due to a continued decline in inventory, low interest rates and increased foreign investment. Sales were more robust at the low end as entry-level buyers have the benefit of government-backed mortgages and the super high end as foreign buyers saw Manhattan real estate as a safer investment According to StreetEasy.com, the median sale price for the second quarter was $840,000, up 2.4 percent from the same period in 2011. Inventory has declined to 14,254 apartments, a 5.9 percent decrease from the same period last year – if this trend persists with rising demand, prices could move higher. More than 3,400 listings went into contract in the quarter, a 20.7 percent increase from a year ago. Manhattan enthusiasm is expected to continue into the early part of summer.
Across the country… For the first time in decades, many U.S. cities are outpacing their suburbs in growth. According to recent Census data, 27 of the nation’s 51 largest metropolitan areas are outpacing their suburbs in growth between July 2010 and July 2011. By contrast, from 2000 to 2010 only five metro areas saw their cores grow faster than the surrounding suburbs. This underscores not only changing attitudes about urban living but also the impact of the housing bust and the recession.
Since the 1920s, U.S. suburbs have grown faster than city centers in every decade, when rising automobile ownership encouraged Americans to begin fleeing crowded city quarters for spacious suburbs. One reason for the move back to urban areas may be improvements in quality-of-life factors, like safety, that historically pushed people to the suburbs. Through the years, cities have become considerably more livable as crime rates have fallen in some urban centers and many downtown areas now feature new amenities like museums and sports stadiums. Another reason is the decades-long migration of factories to the suburbs and rural America, which has cleaned up the cities. For example, in New York in the 1940s, freight traffic ran on an elevated rail line on the city’s west side. These days, that same rail line is the High Line – a lovely elevated public park enjoyed by many New Yorkers.
Back to real estate… A new wave of buyers from China is snapping up luxury properties across the U.S., injecting billions of dollars into the country’s residential-real-estate market. Buyers from China and Hong Kong accounted for $9 billion of U.S. home sales in the 12 months ending in March – up 89% from 2010, making them the second-largest group of foreign buyers of U.S. homes behind Canadians, according to data from the National Association of Realtors.
As a result, the industry is scrambling to woo the new buyers – with some developers installing wok kitchens, following feng shui principles, putting lucky numbers on high-quality units and packaging property sales with government programs to spur foreign investment. Some real estate agencies are flying representatives to China and even hiring Mandarin-speaking agents. From New York, Miami to LA, buyers from the East are radically changing the landscape. Over the last six months in New York, several full-floor apartments in a new Manhattan high rise called One57, each with a price tag of roughly $50 million, have gone into contract with Chinese buyers, according to the Wall Street Journal. In order to appeal to the Chinese belief that eight is the luckiest number, One57 has put many of its most luxurious apartments on the 80th through 88th floors. Of note, apartment 88 is under contract to a Chinese buyer for around $50 million!