Few neighborhoods reflect the overwhelming demand for apartments quite like the Upper West Side. While 2013 is only half-way over, the intensifying struggle for inventory that will most likely define this year’s sales market and impact the next 18 months is best understood by looking up and west. Thanks to the prolonged hangover from the recession, with banks offering record low interest rates and reluctant to finance construction projects, with apartment rents poised to surpass their 2006 high and with a price decline that allowed buyers access to prime locations, absorption of property accelerated like nothing seen in over a decade. Now, with the economy strengthening and mortgage rates on the rise, the scarcity of listings from Lincoln Center to 96th Street has reached a fever pitch.
Generally speaking, a six-to-nine month supply of apartments is considered the perfect equilibrium of inventory. While neighborhoods like the Financial District and Battery Park City are still oversupplied with 19.8 months of inventory, the Upper West Side is down to a 4.8 month supply and rapidly decreasing. Compared to Midtown and the Upper East Side at a 9.4 month supply, and even the highly sought-after Greenwich Village at 5.2 months, the West Side is clearly a standout. To see how far we’ve come since the crash of 2008, it would have taken close to 2 years to absorb the glut of property throughout the city back then. More recently, fear of the Fiscal Cliff, the anticipated expiration of the $5,000,000 Federal gift exemption, the uncertainty of the Presidential election, Superstorm Sandy and the possibility of a capital gains increase hampered recovery, but the switch to a seller’s market with the arrival of 2013 seemed almost instantaneous. Case in point: earlier this year when Bazbaz Development opened 101 West 87th Street, there were more than 1,200 buyers on a waiting list for just 62 units. Equally remarkable was how the project sold more than 40% from floorplans and renderings even before formally launching.
The natural consequence of such a dearth in supply is increased prices, and as prospective buyers watch both sales figures and mortgage rates rise in tandem, the sense of desperation grows. On the West Side, the median price of condo resales rose 20% to $1.26 million, with coop resale prices up 4% to $730,000. For sellers, all this feels like the end of an agonizing nightmare; on the other hand, experts have already coined 2013 “The Year of the Exasperated Buyer.”
So why is the West Side so incredibly popular? Though a snarky few describe the neighborhood as “Attack of the Strollers” and bemoan the area’s decidedly liberal mindset, it offers prosperity without pretension and an energy that wins over intellectuals, media moguls, hipsters, young and old, yuppies and those less fortunate. With the construction of Lincoln Center in the 1960’s, gentrification progressed at a temperate speed that today allows a sufficient number of family-owned businesses alongside the inevitable big-market chain stores. Add to this the number of museums, exceptional schools, access to both Central and Riverside Park, and multiple subway lines (as compared to its longstanding East Side rival), and you have an extremely livable enclave that New Yorkers will always want to make their home. The bigger picture problem remains, the options are few and far between here.
New Yorkers always know a good thing when they see it.