The average price of a Manhattan apartment rose 33.5% to $1,700,00 from the same quarter a year ago.
- The average price of a Manhattan coop rose to $1,300,000 from $996,000 a year ago
- The average price of a Manhattan condo rose to $1,900,000 from $1,300,000 a year ago
- The median price of a Manhattan apartment rose to $917,000 up from $840,000 lasy year.
- The median price of a 1 Bedroom apartment rose 12% to $750,000 from $699,00 last year.
- 4 Bedroom plus coops rose 86% to $12,900,000 from $6,900,000 last year.
While prices are up sales are slowing and inventory is rising. During the 1st quarter of 2008 71 apartments sold for more than $10 million compared to only 17 in all of 2007. 15 Central Park West and The Plaza had closings this quarter with record breaking sale prices skewing the price averages higher. Many of these units were in contract for a year.
Prices rose throughout Manhattan including Upper Manhattan's Hamilton and Washington Heights.
Brokers have reported that some Bear Sterns executives have put their apartments on the market. While there has been some fallout from Wall Street there is strong activity from foreign buyers.
In the past when the financial sector has a bad year Manhattan real estate is hit hard. However, there has never been a time before when Manhattan real estate has been so attractive to foreign buyers because of the weak dollar. Foreign buyers primarily buy condos since most coops do not allow foreign ownership. Some coops have recently changed their rules to permit foreign shareholders.
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6 Responses to "Manhattan Apartment Prices rise in 1-Q- 2008"I would like to first thank you for your intriguing post on how the prices of condos and apartments continue to increase even with the slowing market in Manhattan (aerial view of Manhattan below). This is a very interesting post, because with the current slumping market situation it is fascinating to hear that the average price of an apartment increased 33.5% compared to the same quarter last year. That seems outrageous with what is happening with the market right now that the average price would be $1,700,000 for an apartment in Manhattan. It is obvious as you state that "prices are up sales are slowing and inventory is rising". How do they expect to get people to pay these increases in prices when people can see all the units are not selling? It is interesting that you mentioned the interest from foreign buyers with the fallout taking place on Wall Street, it seems like foreigners are taking advantage of our market with the falling dollar and the market situation. Is it a good thing if citizens are not able to buy the apartments and condos and it's all being bought up by foreigners? Another significant move was the the 86% increase of a 4 bedroom plus co-op that rose from around $6,900,000 last year to $12,900,000 this year. That certainly is a major increase even for wealthy, but how do you expect to attract New York buyers with that type of an increase in this recessionary market? Even the median price of a one bedroom apartment rose 12% from $699,000 yo $750,000 this year. Truly I do not think this is the best move for the New York property owners to make if they want to generate buyers within the city. Yes, they will still get the foreign investment but I do not know if that is enough to over come the ever increasing build up of unsold units. Thank you for your interesting post again and I guess time will only tell as to the outcome of the current market.
Adl,
Thank you for your comment and thanks to the link from your blog. I found your blog quite interesting. When sales figures are reported each quarter they should be taken with a "grain of salt". During the 1st quarter of 08,71 properties sold in Manhattan for more than $10 million. This is primarily due to the ultra luxury sales at 15 Central Park West and The Plaza. These sales skew the numbers quite high. The 4 bedroom plus coop prices have been rising steadily because of the demand for large apartments and the shortage of them. Many families are choosing to stay in the city and raise their kids here rather than the suburbs. While most of the country has been in a housing crises due to sub-prime mortgages, risky mortgages and over building there are many characteristics of Manhattan that are quite different than the rest of the country. Notably there is no "sprawl" like most cities. Builders can not keep building and spreading out here. Manhattan is a small densely populated island with very little land or buildings left to develop. Manhattan's population increased by 8000 in 2007. It's population is expected to increase by nearly 1 million people within the next few decades. The high price of oil helps a city like NYC and Manhattan with good mass transportation. People are leaving the suburbs and returning to cities. Many demographics are choosing the urban lifestyle. There is life with out a car. 75% of Manhattan's hopusing is rental buildings. Home ownership in Manhattan is 70% coops. While the influx of foreign buyers may keep prices up and displace some New Yorkers there are many wealthy New Yorkers. Manhattan resident's salaries are more than 3x the national average, Manhattan is the wealthiest county in the country. Markets go in cycles. No one can predict the future and it is very possible that prices will decline or stay flat in the next few years. Prices declined in the early 90's and in 2006 prices declined and the market slowed down and rebound even higher. I agree with you that only time will tell. Time is real estate's friend. Over time (long-term) real estate is always a great investment. As a short term investment it is always risky.
Thank you for taking the time to respond to my comment. I found your response very insightful. Manhattan is a very interesting market to follow. I will continue to refer to your blog to keep updated.
Hi Mitchell - inventory figures are climbing at an annualized pace of 50%+. granted this will slow, but my sense is the same figures next year same time will be back to 2006 levels and the real question at that time will be whats going on with inventory? if cycles hold true, all the new development will be in the hands of lenders and they will be sellers. remember, lenders can't do business until they close out the loan cycle. there is very little if no, debt capital to buy developers time to market. price cuts will happen on the high end new stuff and that will drive prices down on the sub $2 mm inventory as those buyers step up in the higher end discounted properties. the conundrum of course will be how does one buy a high end home when you can't sell your existing home? we could very well see inventory hit 8,500 or 9,000 units by year end.
Hi Anonymous, I'm not sure where that 50% increase annually in inventory is coming from.
A new city wide report just came out today from REBNY. According to the report City-wide housing unit permits for February 2008 are 1,156, down compared to 1,863 permits in February 2007. This is the second month of decline compared to a year ago.
Most of the new developments seem to be selling pre-construction. Some developers might have financial problems.
In 2006 inventory was up 60% to 7,000 units. Prices declined in 06 then went back up in 07.
Even at 9000 units that is a 4.5% absorption rate. Manhattan has about 800,000 housing units. 600,000 are rental buildings only 200,000 are condos and coops.
Prices will level or decline if inventory keeps rising. Supply and demand determine price and the direction of the market. Eventually the inventory gets absorbed in Manhattan.
I'm not so sure you are correct but if you are and cycles hold true then it will be a great buying opportunity.
It's always best to buy and sell in the same market. Its not a conundrum. You will be able to sell your existing home it just might be a lower price than last quarter or last year but you will make it up by getting a better value on the high end new home.
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