Island of the elite

yes..

i hope not...

$108K isn't really "elite" territory, especially given two incomes.

I'm not sure we're at the bottom but I've long been saying that Manhattan has become a playground for the rich - & the tourists.

Yes, Manhattan has been expensive for the last 13+ years for many. Looking back, it's probably been expensive for 20+ years. By that, I mean you couldn't just show up, get a job as short-order cook or cab driver or equiv., not work a lot of hours, and be able to afford a small studio here. From what I read, one could do so in the halcyon days of the 60s/70s.

But if you look at the housing market of the 60s - there was not much to "own" on the UWS other than townhouses. Most of today's co-ops were rentals. Default mode was to rent. I wasn't here, but I'm kinda certain that moving here as a young family in the 60s was probably a pretty "out there" thing to do. Another thing if your roots were actually in Manhattan, and you stayed on.

Not a phenomenon restricted to Manhattan, tristate area or even bubblicious RE markets of the noughties. Back in my hometown, I know of many families who didn't make a whole lot of $ (mom making min. wage as seamstress, dad short-order cook) comfortably making enough to own in the 60s and buy a rental property. The inflation of the 70s, the RE ramp-up in the 80s and 90s put an end to that.

Well, according to Wikipedia, "In 2006, there were approximately 116,011,000 households in the United States. 1.93% of all households had annual incomes exceeding $250,000." 1.93%? A household income of $250,000.00 wouldn't afford me that sample apartment, so that would put the required household earning power well above that threshold and put the percentage of US households able to buy such an apartment, at least by 2006 standards, at a much lower percentage. Fairly elite if you ask me...

I would imagine the after tax down payment alone would be daunting to most. So even if we adjusted that down payment to say 20% of the price, the mortgage adjustment just takes it even deeper into elite territory. Is this what value looks like and if so for whom?

There was a time where the government had policies in place to help the working class; I'd say probably with Reagan, during the "fancy eighties", the government became hijacked by the wealthy & the corporations.

I don't know if it was just Reagan.

seekingvalue, that's a very simplistic basis for comparison ... you might as well use worldwide statistics, not just U.S.

Better ways of looking at it:
1. Manhattan is similar to the "good" neighborhoods in other cities. How affordable are those good neighborhoods to lower-income families in those cities?
2. The Northeast has a higher cost-of-living, and generally a higher income, than most other parts of the US. The NY Metro area higher still, and NYC even higher. How out of whack is Manhattan in comparison?
3. Are you comparing 3BRs in buildings that were clearly built for the upper class, as is the case for most Manhattan buildings over ten stories? Or are you considering the Manhattan buildings that were built for the lower class, as in five-story non-townhouse buildings, AKA tenements?

Manhattan's always been expensive, even relative to the incomes here. Depending on how fussy you were, though, you could always finagle something cheap. E.g., when I moved here as a kid in 1977, I paid $140 per month for a room in a decent SRO at 75th and Amsterdam. A few years later I married into a rent-stabilized place, so never had to really scrounge as people do today. Over those 30 years I've been in every variety of apartment, but in the early years wouldn't even have known which were owned or rented. I'd think 40 Fifth or One Fifth were "nice buildings", for instance, but wouldn't have known how expensive they were. (This is all pre-RE-obsession, public records, etc.)

alanhart, of course affordability is always a relative, but my original and subsequent posts I think illustrate that really by ANY standards, a typical 3-bedroom apartment below 96th street even in this post bubble environment, is a stretch for most dual-income professionals. While I acknowledge that NYC enjoys a higher average household income than most places, it doesn't change my view that we have become an island of the elite.

NWT, RE obsession?

surprised that you are just learning this -- if you were in certain parts of the country an income of $250k sets you up for McMansion land and foreign domestic workers.
Here, some foreign domestic workers could earn that
Elite, does not even begin to spell it out

What's elitist is defining Manhattan as "below 96th street". You're cherry-picking your example, and then expressing surprise at the results. Are you equally surprised that a beachfront single-family residence in Malibu has become too expensive for most salaried employees?

And do you really and sincerely think that dual-income professionals in the NYC metro area, beyond MAYBE the first couple of years in their fields, earn less than $54,000 each?

Are you in New York?

I would hazard a guess that there are not NEARLY as many residences > $1 million on beachfront Malibu as there are in NYC. There's a hell of a lot of real-estate below 96th street. Cherry picking? hardly.

Where did I state that dual-income professionals earn less that $54,000 or are you referring to my $108,000.00 cost of ownership number? Besides wouldn't even those people have to pay Federal, state and city income taxes and then feed and clothe themselves, I'm sorry I just don't see your point. My point was that even $250,000.00 doesn't cut it to buy the sample apartment and that even current asking prices albeit cheaper than they were at the high, makes affordability for an exponentially way larger number of homes than Malibu beachfront real estate, for the elite.

and yes, I live in NY :)

"if you were in certain parts of the country an income of $250k sets you up for McMansion land and foreign domestic workers.
Here, some foreign domestic workers could earn that "

Really.

Doing what??

must have a very talented "tongue" to negotiate such compensation for domestic work.

"Manhattan's always been expensive, even relative to the incomes here. Depending on how fussy you were, though, you could always finagle something cheap. E.g., when I moved here as a kid in 1977, I paid $140 per month for a room in a decent SRO at 75th and Amsterdam. A few years later I married into a rent-stabilized place, so never had to really scrounge as people do today. Over those 30 years I've been in every variety of apartment, but in the early years wouldn't even have known which were owned or rented. I'd think 40 Fifth or One Fifth were "nice buildings", for instance, but wouldn't have known how expensive they were. (This is all pre-RE-obsession, public records, etc.)"

NWT, you touched on a very important point that most people wouldn't have thought of.

A generation ago -- before the Internet, before HGTV, before the media's obsession with "lifestyles of the rich and famous", before you ever saw actual television commercials for Mercedes and BMWs -- "regular" people had no idea what they were missing, and therefore had no desire to aspire to what they didn't even know existed.

Pre-1980s, pre-Gordon Gekko, pre-Donald Trump, the rich did not engage in conspicuous consumption. McMansions didn't exist (mostly, of course, because of high interest rates -- as a society, we lived in smaller dwellings purely out of necessity; with 18% fixed-rate mortgages -- back then the only kind you could get -- the rule of thumb for property affordability was only twice your income, and even then it was tight). With obscenely high income tax rates, the wealthy also had an incentive to *hide* their wealth whenever possible (remember how popular numbered Swiss bank accounts were in the '70s?).

But even before the economic necessity of hiding one's wealth, there was a moral sensibility among the rich not to rub their affluence in the faces of the "regular" people. I remember growing up next to one of the richest neighborhoods in the country (at one time it had the highest per capita income in the nation). Several of my aunts used to clean some of those houses (MANSIONS, really -- these were dwellings of 15,000+ square feet, with guest houses bigger than the house I grew up in), and they used to take me along to help.

Here's where my eyes were really opened. In tagging along with my aunts on their Friday "cleaning days", I realized I actually KNEW most of the people who lived in these opulent palaces -- they all went to our church! But back then, it was considered declasse to discuss money, and who had it. These were "regular" people, just like my own Mom and Dad, but they worked hard at BLENDING IN with the rest of the community, and hiding their wealth: their houses, unseen from the street, were tucked behind thick foliage and winding driveways ... they left the Mercedes and the Rolls (yes, I couldn't believe my eyes, but ROLLS-ROYCES) at home when driving "into town", instead taking their Buicks and Lincolns. The "moms" in these houses dressed just like my mom when they ran their daily errands: jeans, a pretty blouse, a smart brown handbag from JCPenney, and a Timex (not ROLEX). This was also in an era before the widespread use of credit cards, particularly status cards like AmEx Platinum or Black -- I remember my mom going shopping with these other moms, and everyone pulling out their checkbooks for every purchase.

The only differences between the rich and the "regular" were the balances written inside those checkbooks.

I think we were all happier back then.

yes, but i much prefer the term "wealthy" over "elite". all you need is the cash (sort of)....

"upper class" or "U" is even better.

A one-thousand word note on aggregate data used incorrectly: http://tinyurl.com/yzmwe5a

"A one-thousand word note on aggregate data used incorrectly: http://tinyurl.com/yzmwe5a"

HUH?

huh?

I'm confused as well

Can you clarify?

You know how much they say a picture is worth...

Thanks, Matt. That was really interesting. I think NYC was always a bit different and always created or attracted some desire for status symbols and less of an inclination to dress down ones wealth. However, even here where I was a child in the 70's/early 80's the behavioral chasm was a great deal smaller between the rich and the not-rich than it is now. For one thing, many of our families still rented apartments regardless of ability to purchase. And so quite often the size and calibre of ones building and apartment was more due to where one's parents happened to have been renting whenever R/C ended (1971?1973?--somewhere thereabouts as it was before I was born but not much.) than to financial ability. Growing up, I knew numerous families with large sprawling apartments in the Apthorp--looking back now I realize that the income level of those families varied enormously, yet to a large extent you would never have know that then. I also don't remember even the wealthiest of my friends traveling in the way that people do now--Aspen,Europe,the caribbean at the drop of a hat. Some of us had country houses(and yes, some of the houses in the hamptons did indeed provide more of that line of divide)but yes, even here there was a great deal more lifestyle similarities despite wealth disparities .

Well, I wonder how people socialized back then, you know, at a cocktail party. Everyone knows proper protocol involves asking 1)Where do you live? and 2)What do you do? Even if people are pretty humble and don't go into a story about where they summered, you can still feel out the situation. Well, that is, if they aren't in their twenties and claiming to be unemployed and broke before asking you if you want to do lines in their West Village pad.

Sorry, I'm not going to reminisce over the good old "egalitarian" days. IMO, if you wanted to know, you knew. If you didn't want to know or were oblivious, you were.

Well I'm certain that the adults knew who had more and who had less. There were a great many teachers/professors/writers and they made less than the partners in the lawfirms or the doctors. But as a little kid the differences frequently were not readily apparent, in a way they could not help but be now.

Two words: Radical Chic

nice writing nyc matt and don't agree with 10023, you knew the diff, wasn't that obnoxious.

Meh, people romanticize the past. Yes, it's more open now and that's not a bad thing.

seeking value, sounds like you either 1.havent been saving enough 2. are looking for too much space give your net worth 3. are choosing a neighborhood where you cant afford what you want. manhattan is an expensive place indeed, but if you make sacrifices im sure you can get what you want.

"Yes, it's more open now and that's not a bad thing."

For some things, perhaps -- but overall, I disagree.

By and large, Americans' obsession with taking on more debt than they could possibly handle correlates directly with this "openness" of how the rich live, what they wear, what they drive -- and how YOU'RE not part of it.

"I would hazard a guess that there are not NEARLY as many residences > $1 million on beachfront Malibu as there are in NYC. There's a hell of a lot of real-estate below 96th street. Cherry picking? hardly."

No, but the more APT comparison is beach-front in LA or Orange county, period. Since you are looking ANYWHERE in Manhattan below 96th, that is like saying you want within 1/2 mile of the beach in either Malibu, West LA (Pacific Palisades, Palos Verdes, Venice), Santa Monica, Hermosa Beach, Manhattan Beacch, Redondo Beach, Seal Beach, Long Beach, hunington Beach, Newport Beach, or Laguna.

The fact is there are PLENTY of places in LA/OC far cheaper for middle or upper-middle income folks, many very near the above places.

Similarly, you could live in Riverdale, Jersey City, Astoria, etc.

You could correctly claim that Beverly Hills/Bel Air/Holmby Hills are an elite island within LA, and you would be correct. Not everyone can live in Hillsborough or Atherton or Pacific Heights in the SF area, or Star Island in Miami, FYI.

Jason, you SORT of make a good point.

But when comparing Manhattan with other parts of the country, you can't rely on geographic area alone. You have to take into consideration more than the MILES that separate us - you have to factor in the TIME that separates us.

Walking out of a $12 million penthouse in TriBeCa, it could easily take you 45 minutes to get to a similarly-priced apartment on Fifth and 86th.

Now, let's use that calculus on the LA area. Are all the homes within a 45-MINUTE radius of Beverly Hills, Bel Air, Malibu, etc. similarly-priced?

"seeking value, sounds like you either 1.havent been saving enough"

I've saved more than enough.

"2. are looking for too much space give your net worth "

Not at all

"3. are choosing a neighborhood where you cant afford what you want."

Not true at all

"manhattan is an expensive place indeed, but if you make sacrifices im sure you can get what you want."

My issue is that I perceive current valuations to be historically high. I have a sense that either the demographic of large parts of Manhattan has evolved into that of "for the wealthy only" or that we are still not quite done with the correction. Your mileage may vary.

I remember in the mid to late 90's that Manhattan RE was SO much more affordable, just 8 to 10 years later, prices had tripled if not quadrupled. It's been an incredible run by any stretch of the imagination, but in my mind the correction has been remarkably shallow.

Being able to afford something doesn't necessarily mean you see it as good value.

I realize there's a whole contingent of people who are expecting (even, perhaps, HOPING) for a return to a '90s-style market "correction".

That's unlikely to happen, given the fact that Manhattan property truly IS more valuable today than it was in the '90s, for two primary reasons:

1. Livability. Crime is at historic lows. Nearly every corner of Manhattan is "safe", at any hour, on any day. Subways, relative to prior years, are pristine. Cabs are as rider-friendly as they ever have been. Giuliani has successfully chased away the last vestiges of any red-light district Manhattan used to have. Never has Manhattan been "safer" or "cleaner" for families.

2. Technology. Thanks to the Internet and email, more rich people than ever before can live here, regardless of whether they actually make their livings here. Never has it been easier for a Texas oilman, a German hedge fund manager, or a Hong Kong designer to have a home here. Its simple economics: "rich" New Yorkers are not only competing with each other, they're now competing with rich people from all over the globe for space on an Island that hasn't changed size by one inch since they created Battery Park City from the landfill from the World Trade Center.

"all the homes within a 45-MINUTE radius of Beverly Hills, Bel Air, Malibu" ... i.e., areas within half a mile of those places.

Oh please, Alan.

As someone who's driven around LA quite often, I can tell you that a 45-minute radius from Beverly Hills is pretty much all of LA.

"I realize there's a whole contingent of people who are expecting (even, perhaps, HOPING) for a return to a '90s-style market "correction".

That's unlikely to happen, given the fact that Manhattan property truly IS more valuable today than it was in the '90s, for two primary reasons:"

So what you're saying is buy now or forever be priced out? I should just pull the trigger? Not even a higher interest rate environment can pressure prices any further? The city is just too livable and wired?

The inevitable shorting of US treasuries by German hedge fund managers as the fed reverses its quantitative easing monetary policy stance won't affect the valuation of their new Manhattan digs?

Surely their are more variables at play here that can potentially impact prices down the road than just livability and communications?

As an aside, I am seriously considering pulling the trigger on an apartment, but just felt a need to communicate my reticence.

I'm merely pointing out two very important factors that have enhanced property values since the '90s that aren't going away any time soon.

No one can predict the future. Hell, a dirty bomb could explode on Wall Street, rendering everything below 42nd Street completely uninhabitable for the next 10,000 years.

Now, let's use that calculus on the LA area. Are all the homes within a 45-MINUTE radius of Beverly Hills, Bel Air, Malibu, etc. similarly-priced?

Jason - as you say its all of LA proper, and a few of the suburbs. No. But that was really my point. If you work in the Fidi, Brooklyn or JC are a lot cheaper and as quick to get to (if not quicker) than the UWS. If you work midtown west, West NY or Hoboken or Wehaken or LIC..ditto. Riverdale is still 45 minutes. If you work midtown east...etc. My point is you don't HAVE to live in Manhattan, you chose to. And many people who DONT work in Manahattan choose to. For example, any morning you see thousands of young professionals (mostly white) getting off at 125th/Lex and transefering to the metro North to get to RBS, UBS, SAC, etc in CT or someplace in White Plains. They COULD live and work in CT, or closer to it in Westchester, but CHOOSE to live in Manhattan.

People in LA COULD live in Hollywood or Berverlywood or Touluca Lake, but CHOOSE WeHo, Bel Aire and Beverly Hills.

And that choice costs money.