A Boom With Two Views
A real estate study crossed my desk recently, a nicely designed and almost regal-looking document issued on heavy stock paper with golden-hued headings. But the report's quiet and distinguished style belies its contents, which all but scream. Loaded with superlatives, this market overview describes an almost unprecedented boom in the prices of Manhattan co-ops and condos, the sort of market that turns apartment owners into minimoguls overnight in an economy so vigorous, even the wealthy can't get deals.
Days later, a second report followed. This one, on unremarkable paper, delivered grimly familiar details about the state of impoverished New Yorkers, who are apparently immune to the e-commerce- and Wall Street-induced frenzy that has sent real estate soaring. This study found that nearly one in four New Yorkers lives below the poverty level, a ratio that has been essentially steady throughout the 1990s.
The real estate data comes from Douglas Elliman, the Madison Avenue firm that serves the toniest Manhattanites. The poverty news was issued by the Community Service Society (CSS), a nonprofit advocacy group for the poor. The two reviewsissued within weeks of each other from offices only blocks apartcouldn't be more different, or more discouraging.
To be sure, each focuses on extremes. The Elliman study deals only with the choicest Manhattan real estate and primarily with clients who make at least $100,000 a year. The New Yorkers included in the CSS review are more earthbound. The poverty threshold for a family consisting of an adult and two children, for instance, is $13,133 a year. A full 70 percent of the city's poor adults are unemployed, although more than one in 10 are in poverty despite the fact that they do indeed hold full-time jobs. A third have high school diplomas; more than 20 percent have some college, including some with bachelor's or even postgraduate degrees.
The studies are apparently unrelated, but taken together, they profile two permanent features of New York's landscape. And they delineate the degree to which New York's top echelon is enraptured in a revelry while the bottom remains intractable. The issue is not that the poor can't move into luxury towers; it is that in many cases, they are unable to afford even the basics.
Consider that families with children spend nearly three times as many days in city shelters as most co-ops and condos spend on the market (257 days, versus 94). The hike in the price per room for a luxury co-op8 percent, or $234,866matches the city's 1998 employment rate. And the 11 percent rise in the average sales price of a condo mirrors the 11 percentage point decline, from 1996 to 1998, in the number of families with children who were granted food stamps.
The details of each report are remarkable. In the Elliman survey, the average price of a two-bedroom condo is an astounding $803,316; condo prices are up 84 percent since 1995. The average two-bedroom co-op sells for $654,084. For the first time in a decade, luxury co-ops (by definition, located on Park Avenue, Central Park West, or Fifth Avenue) top out at over $2 million ($2,104,251, to be exact)a record-setting jump of 39 percent. And aggregate sales for 1999's third quarter alone topped out at $1,453,000,000the highest since Elliman began tracking these things 10 years ago.
According to CSS, more than a third of all New York City children live in poverty, as do more than half of the female-headed households. The city's poverty rate for families is twice the national average; ditto for unemployment. And at the same time that wages are declining, families with children are being cut from public assistance and medicaid in droves. One "bright spot" is the drop in poverty among children, from 41 percent in 1996 to 34.3 percent in 1998; in that same period, overall poverty slid a scant 2.3 percentage points, to 23.9 percent.
Each study had its own methodology: Elliman surveyed 2459 apartment sales from July through September 1999, excluding those below $75,000. When counting rooms, storage areas and maids' quarters were not included. Elliman defined its turf as Manhattan from Battery Park City to 116th Street on the West Side and 96th Street on the east. The CSS document, on the other hand, included all of New York City, but given its skew toward the poor, presumably focused on areas other than Elliman's. The study does not include homeless people.
Despite its generally buoyant tone, there are hints of disappointment within the Elliman report, including the news that record-setting price increases, adjusted for inflation, do not exceed the pinnacles of the late 1980s. And there is "fear" that the recent uptick in mortgage rates might hinder buyers, although the study concludes that any "dampening" is apparently "more than offset by the lack of inventory and favorable economic conditions." In other words, the city's housing crunch never looked so good.
That is, unless you're poor. Those earning the minimum wage ($5.15 an hour) would have to work 114 hours a week to afford an average one-bedroom apartment ($700 a month, based on data from the New York City Rent Guidelines Board). A two-bedroom unit requires an hourly wage of $16.59. The state shelter allowance for a family of four is $312 a month. More than 110,000 families are waiting for public housing, which the federal government says translates into an average eight-year wait. And housing for the poor is often in overcrowded or decrepit apartments, illegally converted homes, or the city's shelters.
What does the new year hold for each study group? CSS president David Jones says even if the market maintains its upward trajectory, the poor can expect little improvement. "Perhaps more than ever before we are creating a dual city, and that's not good for anyone, including business," says Jones. And while the rich can bank on at least short-term prosperity, the city's fundamental housing shortageeven at the highest endmeans buyers will still get squeezed, says Jonathan Miller, who crunched numbers for Douglas Elliman. But he's not without optimism. "Maybe," he says, "we'll see a little more sanity into the year 2000."
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