Following the Money in Residential Real Estate

Nearly half the money spent on residential real estate in Manhattan during the first quarter of 2019 (45.4 percent, to be exact) was spent on the most expensive homes — those that sold for more than $4 million — according to information collected by Jonathan J. Miller, president of the appraisal firm Miller Samuel.

As for the most affordable homes — those priced under $1 million — only 14.5 percent of the money spent on real estate went toward buying them.

That might not seem surprising, but rewind to the third quarter of 2001 and you’ll find that ratio nearly inverted: 14 percent of the money spent went toward properties over $4 million, while 42 percent went to those under $1 million. (The share spent on homes in the middle, between $1 million and $4 million, has remained relatively unchanged.)

Why the huge growth at the top? Simply put, the high cost of land combined with easily available capital made building anything but the highest-end properties unappealing to investors and developers, said Mr. Miller, who began charting the dollar distribution among these price ranges in the days following the Sept. 11 attacks, anticipating that the event might affect the market.

Lower interest rates and tax credits for first-time home buyers helped boost the under-$1 million market and tamp down the high end somewhat, he noted, but ultimately the over-$4 million market continued its upward trajectory, accelerated by a flood of foreign wealth.

While recent reports suggest that growth at the high end may finally be slowing, the figures for the third quarter of every year since 2001 show just how relentless that growth has been.

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