Real Estate Housing Markets and Black Swan Events: Manhattan vs. Total U.S.

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Real Estate Housing Markets and Black Swan Events Manhattan vs. Total U.S. Events: September 11, 2001, The Great Recession, and the COVID-19 Pandemic

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Real Estate Housing Markets and Black Swan Events

Bild auf Platzhalter ziehen und Größe anpassen

Bild auf Platzhalter ziehen und Größe anpassen

Median Residential Sales Price, Manhattan vs. Total U.S. |


Understanding how residential real estate reacted to previous black swan events can provide perspective in uncertain times. This report compares how the Manhattan and U.S. markets responded to crisis events over the last 20 years. This chart highlights how Median Sales Prices Bild auf Platzhalter ziehen und Größe anpassen were impacted by: September 11, 2001, The Great Recession and the COVID-19 Pandemic.

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Real Estate Housing Markets and Black Swan Events Median Residential Sales Price, Manhattan vs. Total U.S.

Recession Recession

Manhattan

After 9/11, median prices actually increased, even in Manhattan.

U.S.

12 months after the March 2020 shutdown, Manhattan prices were essentially flat, while U.S. prices climbed nearly 8%.

+ 2%

+ 2%

$1,100,000

+ 3%

$374,400

+ 8%

$618,784 0 $262,091

+ 1%

+ 5% 1 Year After 9/11

Notes: Timeline to Sep 2021. Prices adjusted for inflation. Data is normalized based on first-year values. 9/11: September 2001 Great Recession: September 2008 | Pandemic: March 2020

1 Year Before

After stabilizing in 2009-2010, Manhattan declined to their lowest point in 2012, about one year after the multi-year recovery in U.S. prices had begun.

1 Year Afterprices

The Great Recession

1 Year Before

1 Year After

Pandemic


While impacted by three black swan events over the last two decades, From January 2000 through Q3 2021, U.S. median residential real estate prices increased 43%. During that same period Bild auf Platzhalter ziehen und Größe anpassen median residential prices in Manhattan increased 78%.

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Real Estate Housing Markets and Black Swan Events

Bild auf Platzhalter ziehen und Größe anpassen

Bild auf Platzhalter ziehen und Größe anpassen

Number of Residential Sales, Manhattan vs. Total U.S. |


Understanding how residential real estate reacted to previous black swan events can provide perspective in uncertain times. This report compares how the Manhattan and U.S. markets responded to crisis events in the last 20 years. This chart highlights how the Number of Sales Bild auf Platzhalter ziehen und Größe anpassen were impacted by: September 11, 2001, the Great Recession and the COVID-19 Pandemic

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Real Estate Housing Markets and Black Swan Events Number of Housing Sales, Manhattan vs. Total U.S. Recession Unlike the country overall, Manhattan transaction volume dropped in 2001, but it recovered quickly, surpassing 2001 and 2000 levels in 2002.

1,283,000

Manhattan

U.S.

13,430

11,748 877,000 9,184

769,000 - 45% 7,430

- 76% 1 Year After

9/11

Notes: Timeline to Sep 2021. Prices adjusted for inflation. Data is normalized based on first-year values. 9/11: September 2001 | Great Recession: September 2008 Pandemic: March 2020

1 Year Before

1 Year After

306,000

The Great Recession

The Great Recession’s impact on U.S. sales was longer and deeper than it was on Manhattan, with the number of sales dropping 76% (vs. 45%) from their peak before starting to recover.

In 2020 Manhattan transaction volume dropped 29% from the prior year, while U.S. volume increased 21%. In 2021, 1Manhattan Year After Year Before activity1 turned around, and the number of sales is ahead of the prior 3 years with 3 months to go. Pandemic


The number of U.S. annual sales have yet to surpass the peak of over 1.2 million transactions achieved before the Great Recession, with 2021 sales reaching only 62% of the 2005 total. The number of Manhattan sales have not yet reached their Bild auf Platzhalter ziehen und Größe anpassen 2007 peak of 13,430, but in September 2021 they hit 77% of 2007’s total.

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Real Estate Housing Markets and Black Swan Events

Bild auf Platzhalter ziehen und Größe anpassen

Bild auf Platzhalter ziehen und Größe anpassen

30-Year FRM v. Sales Units, Manhattan v.s Total U.S. |


Understanding how residential real estate reacted to previous black swan events can provide perspective in uncertain times. This report compares how the Manhattan and U.S. markets responded to crisis events in the last 20 years. This chart highlights the impact of Bild auf Platzhalter ziehen und GrößeInterest anpassen Rates (30-Year FRM) on the market following: September 11, 2001, the Great Recession and the COVID-19 Pandemic.

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Real Estate Housing Markets and Black Swan Events 30-Year FRM v. Sales Units, Manhattan vs. Total U.S

Recession Recession

Interest Rate

One year before 9/11, the interest rate was 8.05%. Rates decreased more than 2 points over the next few years, stabilizing around 5.8% in 2003.

Manhattan

U.S. One year before the COVID shutdown, interest rates were 3.94%. By September of 2021 they decreased to 2.92%

11,748 sales 877,000 sales 9,184 sales

As sales activity reached peak levels, interest rates started ticking up, hitting 6.41 in 2006. By 2012, they reached a new low of 3.66%

8.05%

769,000 sales

- 1.02% IR

- 2.22% IR 2.94% 1 Year After

1 Year Before

1 Year After

- 2.75% IR 9/11 9/11

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The Great Recession

1 Year Before

1 Year After

Pandemic Pandemic Pandemic

Notes: Timeline to Sep 2021. Prices adjusted for inflation. Data is normalized based on first-year values. 9/11: September 2001, Great Recession: September 2008, Pandemic: March 2020


Following each black swan event, interest rates were lowered to stimulate economic activity. Our analysis shows the clear correlation between these rate decreases and a recovery in residential transaction levels. Bild auf Platzhalter ziehen und Größe anpassen Based on this we believe that current market activity In Manhattan and the U.S. should remain stable as long as there are no meaningful shifts in the interest rate environment.

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