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New York - Unruffled by the moribund US housing sector, New York's residential property market is booming.
With mortgage rates and property prices at historic lows, the city's affluent residents are cashing in on the economic conjuncture to get a pad at bargain values.
Real estate agencies are reporting a surge in activity in private home sales in the Big Apple in recent months.
"Right now we are actually experiencing a pretty strong market... A lot of activity, a lot of signing contracts," said Pamela Liebman, CEO of The Corcoran Group, New York's largest residential real estate agency.
"This has been one of my best years," says Ariel Cohen, executive vice-president at Prudential Douglas Elliman, another agency.
The housing sector was at the heart of the financial crisis that plunged the US economy into recession in December 2007. Across the country, the sector has been struggling to recover from the price collapse.
New York City also felt the impact of the recession with an average drop of some 20% in apartment prices from their pre-crisis peak and an extremely low sales volume in 2008 and most of 2009.
But while property prices have remained mostly flat, sales in the Big Apple have surged unlike anywhere else in the country.
A report by the Real Estate Board of New York (REBNY) showed a 72%jump in the total value of house sales to $7.6bn in the second quarter of 2010 compared to the same period the previous year.
Apartment sales volume in Manhattan increased by 82% over the same period, it said.
The accelerated activity in New York, where the average price per square foot stands at $1 061 ($11 420 per square meter), was due mostly to the high earnings in the city's financial sector in past months, statistics show.
"We are lucky in New York because Wall Street has been doing so well in the past year and a half and this money is holding the market somewhat stable," said Michael Moskowitz, CEO of Equity Now, a Manhattan-based mortgage lender.
Banks reluctant to lend
Brokers are also starting to see more foreign investment in New York's real estate market as the euro began to rise against the dollar.
Another key factor stimulating the market has been the extremely low mortgage rates.
Interest rates on a 30-year "jumbo loan" can be as low as 4.375% and 3.75% for 15-year loans, according to mortgage broker Mark Lazar, vice-president of Allied Financial.
All the same, the American dream of owning a home is getting more and more distant for a growing number of people as banks tighten their scrutiny of mortgage applications in the wake of the financial crisis.
"Mortgage guidelines have tightened tremendously in the last three years. So even while (interest) rates are very low, it is still harder for a lot of people to qualify for a mortgage," said Matt Hackett, underwriting manager at Equity Now.
"Everything is done by the book, all the underwriters are asking millions of questions."
The mortgage market was thrown into turmoil after the 2008 bailout of troubled mortgage giants Fannie Mae and Freddie Mac, which provide financing worth more than $5.9 trillion to the US housing sector, accounting for almost three quarters of the mortgage market.
As the government is still debating what steps to take in order to boost the battered housing sector, banks remain extremely cautious and prudent in approving mortgages.
Lazar said he turns down almost one third of people contacting him seeking a mortgage because they do not meet the basic criteria set by banks.
"I tell them you are not mortgageable," he said. "Banks are reluctant to lend. They feel it is better to limit the lendings for now until the road is cleared" by new legislation.
