From the WSJ:
When Daniel Allen and his wife, Elizabeth, decided they were finally ready to leave their apartment on West 15th Street and buy a house in the suburbs, the couple found themselves repeatedly outbid.
It wasn’t what Mr. Allen, an architect, and Ms. Allen, who now works part time for a small investment bank, expected when they went house hunting over the past year amid the biggest housing downturn in a generation.
But brokers say that so far this year, Manhattan’s bedroom communities have undergone a boomlet in sales and rising prices as city dwellers have been looking for housing bargains in nearby suburbs that were hard hit during the downturn.
The stabilization of the Wall Street economy is helping drive sales—and boosting prices—in these affluent neighborhoods that have easy Manhattan commutes and offer good schools, broker and analysts say. From Milburn and Summit in New Jersey, to Great Neck and Manhasset on Long Island, the close-in suburbs are outperforming the rest of the slumbering regional housing market.
The same is true north of the city. “You can measure the recovery in Westchester by how far you are from Manhattan,” said Chris Meyers, chief operating officer of Houlihan Lawrence, the largest brokerage firm in Westchester County.
Jeffrey G. Otteau, president of the Otteau Valuation Group, a New Jersey appraisal and consulting firm, said that New Jersey towns with short, direct train rides to Manhattan outperformed the rest of the state during the first half of the year.
“We have seen the effects of the Manhattan rebound in the market we describe as Midtown Direct,” he said.
The suburban bump echoes rising prices of sales in Manhattan during the past few quarters. In the ring of towns in Westchester nearest to New York City, median prices are up 14% this year, and are only 3% below the market peak in 2006, according to Houlihan Lawrence.
Across New Jersey, Mr. Otteau said median home prices had risen less than 2% in the first half of the year. But in the Midtown Direct corridor, with direct commutes of 35 minutes or less, he said prices rose 5.7% and sales rose 24%.
Sales rose even more in the New Jersey condo market across the river from Manhattan, but with a surplus of new condominiums, median prices fell by 8.2%.