Manhattan: Crime Correlates with Income But Not Home Price

Stephen Chung

Managing Director

Zeppelin Real Estate Analysis Limited

February 2005

Quite a few cities in China, including Hong Kong, seem to look up to international metropolitans such as New York City (NYC), London, or even Tokyo for inspiration or as a role model. As far as the Big Apple is concerned, Manhattan seems to be the focus. As such, let’s learn something about it:  

A)     Information sources = include relevant websites, government statistics, business reports, and real estate data.

B)     Overall NYC = has a population of around 8M, with a median income of close to US$40K per annum and a median household asset of US$34K. The average age is around 36. Apart from Manhattan, the other major boroughs include Queen’s, Brooklyn, Staten Island, and the Bronx. The population would exceed 10M if the whole ‘metropolitan statistical area’ is taken into account. 

C)    Overall Manhattan = has a population of around 1,600,000, with a median income of US$50K per annum and a median household asset of US$35K. The average age is 35. The major neighborhoods consist of Upper East Side, Upper West Side, Midtown, and a Downtown.

D)    Closer scrutiny of Manhattan:

1)      Household income distribution = most households earn more than US25K per annum and less than US$75K per annum. Those earning more than US$75K tend to concentrate in the E / W Upper Sides and only a minor proportion earn more than US$100K with many of these located in or near the financial district.

2)      Household asset distribution = the median household asset figure is around US$50K though it has to be emphasized that the average figure could be twice the median figure, given that major world / financial centers tend to have a wider wealth gap.

3)      Home price distribution = very few homes require less than US$500K, and the most common range consists of those in the US$750K to US$1M. Homes exceeding US$2M are not overly rare and many of such pricey housing are located in the financial and uptown districts.

4)      Owner-occupied homes = most neighborhoods have less than 20% of homes being occupied by the owners-landlords, and those in the highest bracket rarely exceed 40%. This implies most occupants are tenants.

5)      Residents living in Manhattan for 5 years or longer = most neighborhoods have fewer than 40% of their residents who have lived there for longer than 5 years, and a few districts have less than 20%. The population seems quite mobile. 

6)      Households with children = less than 20% of households have one child or more, and this matches the North American household tendency to raise children in a more suburban environment.

7)      Crime rating = the national average is 100 and Manhattan has an overall of 150, i.e. it harbors 50% more crime than the USA average. Crime here includes assaults, burglaries, robberies, rapes, and the like. One interesting point though is that the crime rating is only 50 in a few high income neighborhoods.

E)     Preliminary observations: based on the above

1)      Most owners of Manhattan residential properties do not live in their own Manhattan properties = and this may be supported by the fact that the comparatively low median household asset figure.

2)      A vibrant rental market = as evidenced by a high proportion of renters, most households having no kids, a highly mobile population, and a generally younger population. 

3)      Crime rating correlates with income distribution but not residential prices = IF one wishes to have the ‘safest’ neighborhoods, then one needs to consider ones that have the highest income earners, but NOT necessarily the highest-priced homes.

In summary, Manhattan seems to attract the young and talented, with most being single or unmarried, irrespective of being rich or poor, and offers them a platform to demonstrate their financial, investment, and / or deal-making skills, just like Hollywood being a magnet for aspiring actors and actresses. In the process, a unique set of cultures and characters has emerged over time, and this is not something that is easy to emulate.

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