Manhattan RE Prices During the Roaring Twenties

Abstract:

Using new data on market-based transactions, researchers from Harvard University and U C Davis construct real estate price indexes for Manhattan between 1920 and 1939. During the 1920s prices reached their highest level in the third quarter of 1929 before falling by 67 percent at the end of 1932 and hovering around that value for most of the Great Depression. The value of high-end properties strongly co-moved with the stock market between 1929 and 1932. A typical property bought in 1920 would have retained only 56 percent of its initial value in nominal terms and 77 percent in 1920 dollars two decades later. An investment in the stock market index (including dividends) would have outperformed an investment in a typical property (including net rental income), by a factor of 5.2 over this time period.

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