A Super Strong 1st Quarter: Manhattan Residential Real Estate Soars Again!
A Super Strong First Quarter: Manhattan Residential Real Estate Soars Again!
Manhattan condo and co-op prices are finally seeing the impact of chronically low residential inventory, and a shift toward luxury in new development.
The average sales price for a Manhattan apartment jumped by a shocking 30.9 percent year over year, according to a quarterly report compiled by appraisal firm Miller Samuel.
The average price per square foot increased by 23.6 percent year over year, to $1,363 in the first quarter of the year.
Rising prices can be attributed to the ongoing Manhattan inventory crisis, which has seen fewer than 5,000 apartments on the market at any given time over five consecutive quarters.
Also contributing is a general upward pressure on new development pricing as the result of an overheated market for land. Competition between developers trying to secure new Manhattan sites has sent land prices above $800 per square foot in some instances, meaning developers have to reach for the skies on pricing to maintain profitability.
The average price of housing stock on the high-end of the market is skewing upward thanks to a handful of luxury buildings like Extell Development’s One57 at 157 West 57th Street, where prices have topped $6,000 per square foot. A large number of sales closings at the building hit public records last quarter, pushing average closing prices up.
The average price in the first quarter of the year for a luxury apartment, classified as an apartment in the top 10 percent of co-ops and condos, was $2,706 per square foot, a 40.6 percent increase year over year and a 17 percent increase from the fourth quarter of 2013. To be in the top 10 percent, an apartment had to close for at least $3.72 million in the first quarter, up from $2.94 million in the same quarter of 2013.
I have been working with a Client Buyer, looking to purchase a two-bedroom Condo in Chelsea. We tried getting several apartments, and every single one, we lost out on, because it went above the asking price for all cash offers.
But experts said the overall market numbers, while undoubtedly strong, may be somewhat deceptive. That’s because the first quarter of 2013, with which comparisons are made, was particularly weak, coming directly after a frantic fourth quarter, which saw a rush of closings ahead of an expected rise in capital gains taxes. Month-over-month increases paint a slightly less dramatic picture.
However, even if you try to adjust for that year-over-year anomaly, we’re still noticing a sharp increase in price.
Median prices by unit-type were up across the board in the first quarter.
The median price for one-bedroom condos rose 12.5 percent from the year earlier, to $928,000, the data shows. The median prices for a studio and a four-bedroom also jumped by 7 percent and 20.4 percent, respectively, to $620,000 and $5.42 million.
The average sales price for a co-op was up 41.5 percent year over year, to $1.49 million, and 27 percent from the fourth quarter of 2013.
For new development, the average sales price was $2.83 million in the first quarter, a 47.7 percent rise from the first quarter of last year and a 5.1 percent uptick quarter-over-quarter.
Meanwhile, the inventory shortage shows no signs of letting up soon. While a rise in permit applications over the last three years may signal a jump in the number of units coming to market, those units likely won’t hit the market for some time and, even then, won’t probably be enough to meet demand.
“A permit filing means that you’re not going to see that project be marketable for at least a year or two, and then closing in two or two-and-a-half years,” Miller said. “So, that’s really a commentary on what we’re going to see in the market in 2016.”
Listing inventory stayed steady year over year, rising by only 0.2 percent, according to Miller’s report. The median number of days on the market dropped to 81 in the first three months of the year, from 90 at the end of 2013.
Although the median sales price is currently up 18 percent, they’re still 5.1 percent below the 2008 peak. We are seeing signs that by mid-year we’ll probably have not only reached up to that peak, but very likely we’ll even pass it.
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Fernando Branco, GRI, ABR, CNE
Lic. Assoc. Real Estate Broker - NY
Realtor NY & CT
Graduate Realtor Institute (GRI)
Accredited Buyer Representative (ABR)
Certified Negotiator Expert (CNE)
Charles Rutenberg Realty
127 East 56th Street, NY NY 10022
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Sources: Streeteasy, The Real Deal, The Wall Street Journal
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