The Real Deal New York

Manhattan’s average sales price hits a record $1.8M

New development prices exceed $2,000 per sf for the first time

July 01, 2015 08:00AM
By E.B. Solomont


Clockwise from top left: A luxury condo for $6 million, a co-op for $795,000, a new development condo priced at $2,000 per square foot and a condo for $1.75 million

UPDATED, July 1, 11:40 a.m.: Manhattan apartment prices soared during the second quarter, breaking records across the board, according to a new report from Douglas Elliman and Miller Samuel.

The average sales price for all apartments topped $1.87 million, a new record, the report found. In the new development segment of the market, prices exceeded $2,000 per square foot for the first time ever, achieving an average sales price of $2,011 per square foot.

“The records had records,” said Jonathan Miller, president of Miller Samuel and author of the report.

During the second quarter, the median sales price rose 7.7 percent to $980,000, the second-highest price Miller has recorded to date, and up from a median price of $970,000 during the first quarter. Meanwhile, the median price for condos climbed 10.3 percent to $1.39 million, the median price for co-ops increased 9.7 percent to $795,000 and the median price for lofts increased 13.8 percent to $2.1 million.

When it came to luxury real estate, defined as the top 10 percent of sales, the median price soared 20.6 percent to $6 million, and the median price in the new development market topped $1.8 million, an 18.3 percent increase.

“The resale markets for condos and co-ops are a big reason why the records are being broken,” Miller said, of the universal price increases. He said stalling inventory growth is putting pressure on prices.

There were 5,730 available units during the second quarter, up just 1.3 percent year over year. “While inventory is higher than it was at the bottom, it’s leveling off,” he said. “That’s causing prices to rise.”

In the new development market, which accounted for 7.9 percent of closings during the second quarter, the average price per square foot increased 5.8 percent to $2,011. At the same time, the number of new development sales declined 8.2 percent to 212.

Overall, the number of sales fell 20 percent year over year to 2,674, as excess demand was absorbed.

Miller attributed the drop in sales to low inventory. He also said the pent-up demand from buyers, which characterized 2013 and 2014, has largely been absorbed.

“It’s not that the market weakened,” he said. “The last few years, there was pent-up demand on top of baseline demand.”

New development sales over $5 million accounted for 35.5 percent of total closed sales in the second quarter, which is up from 19.7 percent in the first quarter, according to Halstead Property Development Marketing’s second quarter new development report.

Stephen Kliegerman, president of HPDM, said this bodes very well for consumer confidence, especially combined with the fact that two-bedroom units continue to be the most popular in Manhattan new development, with 170 two-bedrooms entering contract or closing during the quarter.

“Typically a two bedroom buyer is someone who has decided they are going to make [Manhattan] their primary residence for the next five to seven years, so that shows stability in the residential marketplace,” he said.

The Corcoran Group, in a separate market report, noted that the number of signed contracts during the second quarter rose 7 percent to 4,188. Signed contracts rose 24 percent compared with the prior quarter. The number of closed sales inched up 2 percent to 4,235.

Compass, in its market report, calculated a total of $6.4 billion in closed sales during the second quarter. More than 30 percent of available inventory topped $3 million and Upper Manhattan’s median sales price of $583,000 set a record, driven by increased prices citywide.