Waiting For The Boom To End

Or so the logic goes. So far, the expected slack in the rental market hasn't appeared. The average rental price for a one-bedroom is up nearly 5 percent in the last year. That's less than the usual annual increase of 10 to 15 percent, says Peter Hungerford, a former broker and cofounder of the real-estate listing site UrbanSherpaNY.com. But it's a long way from a crash. The blame, he says, goes to the many potential buyers who are riding out the uncertain market and renting in the meantime. That extra demand keeps rents high. "Everybody's looking for a drop in prices; everybody's hoping for it," he says. "But I haven't seen it."

Developers are changing plans, too, rezoning buildings from condos to rentals to avoid selling in a bear market. That's keeping upward pressure on sales prices, which climbed 33 percent since last year. They were buoyed by ultraluxury buildings like the Plaza and architect Robert A.M. Stern's elegant retro skyscraper at 15 Central Park West, whose 201 apartments sold for a total of $2 billion. But even excluding those buildings, the average sales price was still up more than 19 percent.

No wonder, then, that beneath the surface, even the housing optimists have their doubts. Sheila McClear, the reporter who wrote the Gawker post, says that it's "wishful thinking" to expect a recession to cap the cost of living—"for Christ's sake, [even] the cost of food is going up." And Florida argues that cities like New York and London are "becoming places for the global wealthy," pushing everyone else into outlying neighborhoods and cheaper metropolises. For now, at least, the dream of a New York housing crash is a dream deferred.

© 2008