New York is on the rebound, the city's residents say, and its housing market is reaping the rewards.
The metropolitan hub of the Northeast was hit hard by the recession of the early 1990s. Some businesses that had headquarters in the city moved to more tax-friendly areas like New Jersey, taking jobs with them, and real estate values declined.
But 1996 has seen a boom in housing demand, especially in areas traditionally populated by affluent professionals.
"Inventories are very tight right now," said Will Hunt, a Coldwell Banker realty agent. His agency, which concentrates on the Upper East Side and Upper West Side of Manhattan, has been adding employees in the past year, he said, and they are looking to add a downtown presence.
Home prices, especially at the upper end of the market, are climbing rapidly, Mr. Hunt added. The average income of the households his agency serves is nearly $200,000, he said.
Mr. Hunt attributes the rebound, in part, to the city's spiffed-up image. "Confidence in the city is back," he said. "There's a perception here that the streets are cleaner."
The flurry of activity can also be attributed to pent-up demand, said Ken Goldstein, an economist for the Conference Board.
"Folks who were locked into an apartment are finally able to get out," he said. "This was the opportunity they were looking for."
Young professionals are not the only group flocking to Manhattan's wealthy areas. Older couples whose children have left home are moving to the city from the suburbs.
These "empty nesters," who often left the city to raise their children, are coming back to "relive their salad days," Mr. Goldstein said.
Homebuyers in New York City are a distinctive group in a number of respects.
According to the 1995 Chicago Title and Trust Metropolitan Housing Study, they make the largest down payments in the country - an average of 27.3%. Repeat buyers pay an average of 41% down, and one out of eight pays cash. Consequently, New Yorkers typically have a stronger preference for fixed-rate mortgages than people in other areas.
Another unusual feature of the New York market is that only a small proportion of homebuyers are unmarried - roughly one in five. In Boston, the count is about two in five. This translates into a larger family size than in most other areas of the country.
Individual mortgage brokers dominate the home loan department here, Mr. Hunt said. "There are just so many loan products available, you need someone to sort them out for you," he noted.
Despite New York's dominance as a banking center, local lenders do not exactly have a stranglehold on the market.
In 1995, Chase Manhattan Mortgage Corp. had more than 6% of the market for loans to buy homes and is especially strong in affluent markets. The Chase-Chemical merger will give it more than 10%.
The new Chase should also have about a 10% share of the refinancing market, vying with Citibank, whose San Francisco unit had about 9% of the refi market last year.
No. 2 in the purchase market was a unit of Minnesota's Norwest Corp., with 5.48% share, while California's Countrywide Funding Corp., now called Countrywide Home Loans, was third.
Norwest, however, has acquired much of the Prudential Home Loans business and will be giving Chase a run for its money.