Issue 109 – NYC Real Estate: Stability When Stocks Swing

While I do not claim to be an expert on the stock market, it doesn’t take one to notice the flux in that market during the last quarter. With legislation regarding tariffs flip-flopping daily, unemployment and inflation rising, and the threat of a full-blown recession on the horizon, it’s no surprise investors are feeling a bit out of sorts. Many are reticent to sink their money into anything potentially volatile right now, namely an asset that can drop on a dime.

Enter: the NYC real estate market. Tariffs push people to stay local; consequently, many will gravitate towards property purchases in a real estate mecca like NYC. We also see other signs of folks wanting to invest in local (tariff-free) assets. For example, vintage car sales have experienced an uptick. Investments in online companies and digital sales are also beyond the reach of tariffs.  

These opportunities become very interesting arenas in the context of a dysfunctional market.

As such, most risk-averse investors prefer putting their money into the local real estate market, which seems much more stable than the volatile stock market. This trend is compounded by the softening of the market due to sluggish sales, leading to more negotiability, as well as lower interest rates sparking more interest. These factors create an opportunistic asset that only gets better with time.  

I’m not alone in this thinking. Last month, Haven, a national magazine focused on luxury markets, noted the same phenomenon. The article points to many examples, such as “historical precedents—9/11, the Great Recession, and the COVID-19 pandemic—when temporary setbacks in real estate were followed by sharp rebounds.”

It then shares opinions by top real estate market experts showing that property in NYC tends to follow a steadier trajectory: “Even during winter months, when housing activity typically slows, rents have reached record highs, bolstered by limited supply and strategic lease structuring by landlords. This steady upward pressure on value has created favorable conditions for long-term investors.”

Indeed, real estate is a steady income-producing asset in NYC, where demand continues to outweigh supply. Other experts cited in Haven concur: “In Downtown Manhattan neighborhoods like Soho, Tribeca, and the West Village, low inventory levels are fueling bidding wars, especially for trophy properties. Scarcity is driving urgency.”

One facet of life never changes: Food and shelter are the primary needs. So if rates are coming down and your income isn’t going up, but rents are—buying property can be one of the most effective ways to grow your own money, particularly when the stock market is unstable or difficult to decipher.

The instability in the financial markets often directly impacts real estate purchases — some buyers use portfolio assets for down payments and to show liquidity for co-op boards. Overall, however, buyers are finding real estate a much steadier landscape to navigate right now, especially when guided and accompanied by a seasoned real estate expert to help them navigate the market.

I am personally witnessing people who might have invested heavily in stocks previously run into the safe haven of the NYC real estate market. I see many clients trying to gauge where they want to park their cash. Some are diversifying, some are unable to diversify, and some are absolutely making hay with the softening market to get some of the most amazing properties at compelling numbers.

According to Olshan Luxury Market Report, 45 contracts worth over $4 million were signed recently — 14 more than in the previous week. Twelve were over $10 million, representing the largest contract signing since December 13, 2021, during the run-up.

The recently released Elliman Report for Q1 also painted a rosy picture: In the co-op and condo sales markets, year-over-year sales are up nearly 29 percent. While inventory is still low, it has increased year-over-year by 7.5 percent, giving savvy buyers an opportunity to jump in. In fact, all important factors are on the rise compared with last year. Tellingly, nine out of 10 sales of properties over $3 million were all-cash deals.

On that note, the New York Post reported that the NYC luxury housing market saw its best quarter in six years! This finding was based on market reports compiled by CNBC from top brokerages, including Douglas Elliman, showing that 58 percent of all sales in the quarter were made in cash.

What is behind this upward trend? CNBC states, “increasingly strict back-to-office mandates on Wall Street and beyond are also bringing high earners back into the Manhattan fold.” CNBC’s report also credited the ongoing “great wealth transfer” of trillions of dollars from the baby boomer generation to their fortunate offspring.

The bottom line is that no one wants to ride a rollercoaster when it comes to their financial stability. Hunkering down now with a solid property purchase, particularly one that can offer a steady increase in economic benefits over time, will outweigh the potentially substantial loss on stocks if the volatile trajectory continues.

Issue 127 – The Price Isn’t the Price

A new calculation is changing what a New York apartment is actually worth. For decades, NYC real estate has been obsessed with price per square foot. However, now we may be entering the era of cost per year.

Consider two apartments of the same size, price, amenities, light, view, and location. If one has $6,000 in carrying costs and the other $11,000, are they really worth the same amount?

Increasingly, I would argue they are not because buyers aren’t simply purchasing apartments anymore. They are purchasing the economics of the buildings they’re in, which are starting to matter enormously. Think: insurance, labor, utilities, repairs, taxes, assessments, energy compliance, staffing, capital improvements, and reserves. While monumentally important, none of these photograph well, but all determine whether an apartment is easy to own — and eventually sell.

We have always understood that certain characteristics affect value: a lower floor trades differently from a higher one, an awkward layout matters, a protected view commands a premium, and poor light equals a discount. However, I contend another discount is related to the aforementioned carrying costs.

The sexiest amenity in New York real estate may soon be a healthy balance sheet. That sounds less exciting than a lap pool, unless you are the one writing the checks. Operating costs in New York have been rising, putting pressure on building budgets and making previously deferred capital projects harder to ignore.

The 2026 New York City Price Index of Operating Costs — which tracks expenses for the city’s rent-stabilized building stock — illustrates the broader pressure. Over the five years through 2026, insurance costs in that index increased more than 80%. Maintenance increased 29%, utilities more than 26%, administrative costs more than 21%, and labor nearly 16%.

Those figures aren’t a direct proxy for every condominium or cooperative in Manhattan. But they illustrate something anyone involved in operating New York buildings already understands: buildings are getting more expensive to run.

One mistake buyers can make is falling in love with the apartment and treating the building as secondary. In New York, you aren’t just buying four walls; you’re buying into a small economy. You’re inheriting its management decisions, staffing structure, physical plant, reserve philosophy, insurance exposure, and capital planning.

A building that deferred maintenance may appear inexpensive today because it hasn’t yet charged owners for the work it needs. That doesn’t necessarily make it inexpensive. It may mean the bill hasn’t arrived yet. Conversely, a building that recently completed an expensive façade project, replaced major mechanical systems, or invested in energy efficiency may initially appear less attractive because owners have already absorbed those costs. We need to consider which building presents the greater risk over the next decade. The answer isn’t always obvious from the monthly maintenance number.

Buyers understandably love low carrying costs, and brokers value them because they make a property easy to market. But low monthly charges deserve as much scrutiny as high ones. A good broker asks: Why are they low? Is the building extraordinarily well managed? Does it have other income? Are the reserves substantial? Or has the board resisted increasing common charges while postponing expensive work?

An important distinction exists between efficient and underfunded. A well-run building with appropriately funded reserves may ultimately be far more economical than one with artificially low monthly charges followed by recurring assessments. It’s not just the number that is meaningful, but the story behind it.

Few words cause more anxiety in a New York transaction than “assessment.” Even here, context matters because not every assessment is a red flag. An assessment financing a necessary capital improvement can actually strengthen the building. A new roof, elevators, façade work, upgraded mechanical systems, or energy improvements may protect long-term value.

The more important questions a sales pro considers are: What is the assessment for? Why didn’t reserves cover the expense? Is it part of a thoughtful capital plan or the latest in a recurring series of emergencies? And, perhaps most importantly, what comes next? A $500 monthly assessment with a clear end date concerns me considerably less than a building with no assessment, minimal reserves, and several million dollars of foreseeable work.

New York’s environmental requirements add another layer of complexity. Local Law 97 places emissions limits on many large buildings and creates increasingly stringent requirements over time. The encouraging news is that the overwhelming majority of covered privately-owned buildings are currently meeting the applicable limits.

But buyers should still understand what their particular building is facing; Has the Board commissioned the appropriate studies? What capital improvements may eventually be required? Has money been allocated? Is compliance incorporated into long-term planning? The concern isn’t whether a building faces a penalty today; it’s whether the building has a credible plan for tomorrow. That, increasingly, is part of due diligence.

New development creates its own version of this problem. Buyers are understandably attracted to pristine buildings with spectacular amenities and, sometimes, surprisingly reasonable initial common charges, but what will the building actually cost to operate when it is fully functioning?

Pools, spas, private dining rooms, screening rooms, landscaped terraces, playrooms, fitness centers, and mechanical systems all require staff, maintenance, and money long after the sales office closes.

The glossy brochure tells you what you’re getting. The budget tells you what you’re buying — both matter.

This conversation also requires nuance when comparing co-ops and condos. A co-op’s maintenance can initially look dramatically higher because it often incorporates expenses that a condo owner pays separately, including the shareholder’s proportionate share of the building’s real estate taxes. A condo may show a lower common-charge number while property taxes sit alongside it.

So, comparing maintenance to common charges without understanding what each includes is meaningless. The correct question isn’t: Which monthly number is lower? It is: What is my total cost of ownership, and what am I receiving in return? I believe strong building economics will increasingly become an amenity in their own right.

Brokers spend an immense amount of time learning how to talk about marble, appliances, ceiling heights, views, and finishes. We should be equally capable of explaining the financial health of the building we’re selling, because that is a big part of valuation.

None of this means price per square foot is irrelevant. It’s still an important metric. But like any metric, it becomes dangerous when used without context.

I’ve spent my career watching New York buyers pay premiums for things that cannot easily be replicated, including light, views, ceiling height, architecture, location, outdoor space, great proportions. But I always add another thing to the list: financial soundness. That may not command the same emotional response when someone walks through the front door. But increasingly, it may command something just as valuable – confidence, which matters in uncertain markets.

For years, we’ve asked buyers how much apartment they can afford. Now we need to start asking them how much building they can afford.  Because in New York, you don’t just buy the apartment — you inherit the economics beneath it.

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