The Real Deal New York

Manhattan apartment market closes out crazy year with record-smashing quarter

January 03, 2014 12:01AM
By Guelda Voien

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Average and median prices in Manhattan (courtesy: Halstead Properties)

Average and median prices in Manhattan (courtesy: Halstead Property)

We’ve said it before, but now we can say it definitively: 2013 was a banner year for real estate, particularly for high-end residential sales. In fact, so many real estate records were smashed in the fourth quarter, according to reports released today by the city’s biggest residential brokerages, that data wonk Jonathan Miller said it was hard to count them all.

The last three months of 2013 had the most sales of any fourth quarter since Miller began compiling the data 25 years ago, according to the report that his appraisal firm, Miller Samuel, prepared for Douglas Elliman. Median condominium sale prices and inventory were also at a record high and low, respectively, Miller said.

“The fourth quarter is usually the weakest,” he said. “But we have a lot of records going on this quarter. It’s a bit of an anomaly.”

In the fourth quarter, 3,297 apartment transactions closed in Manhattan, a 26 percent increase over the same period in 2012, and the median condo sale price hit $1.32 million, up 14.3 percent from $1.13 million this time last year, the Elliman data show. Part of the reason for the spike was that larger units sold, Miller said.

The overall median sale price was $855,000, up 2 percent from a year ago.

The median cost for a one-bedroom condo was $891,000 last quarter, up 9.19 percent from $816,000 last year at this time, whereas two-bedrooms ticked in at a median of $1.83 million, up 12.2 percent from $1.63 million, according to Town Residential’s fourth quarter report. Three-bedroom condos hit $3.22 million, up 3.8 percent from $3.1 million year-over-year.

Co-op prices were up 4.6 percent year-over-year, to a median sale price of $680,000 in the fourth quarter, according to Elliman’s data.

And according to Halstead Property, new development sale prices in the last quarter averaged $1,562 per square foot, up a whopping 26 percent from 2012’s average, about $1,230 per square foot – another record. (Halstead shares data with sister brokerage Brown Harris Stevens.)

Halstead CEO Diane Ramirez credited the premiere of highly anticipated Downtown projects like Walker Tower and 18 Gramercy Park for the booming new development market. The market was “healthy and solid,” she said, adding that she expects more records will be broken next year.

And all that in a year with an unprecedented drop in listings: the number of properties available was 4,164, down 12.3 percent from 3,652 year-over-year, to the lowest level since Miller Samuel began tracking those numbers 14 years ago, Miller said.

This has created problems for brokers, said Frederick Peters, president of Warburg Realty, in a statement released with the brokerage’s fourth quarter numbers.

Co-op owners were “inspired by what they read to believe that their properties could be valued like the new condominiums. … But of course they couldn’t. … So many of these properties have languished on the market for months or even years,” Peters said.

The Corcoran Group’s report also touched on the incredibly low inventory in Manhattan, noting that condo listings had slipped 3 percent and co-op listings 8 percent over the prior year quarter.

But the situation may be changing. In the fourth quarter, the pace of new Manhattan home listings averaged 263 per week, a decrease of 19.1 percent over the previous quarter, but a 14.9 percent increase versus the same period in 2012, according to a report from listings database StreetEasy. Still, some 362 listings were absorbed on average every week, or 2.2 percent more than the 370 seen in the third quarter, the report shows.

The record flurry of sales is even more surprising given that the fourth quarter of 2012 also saw a massive spate of trades, as fears of the so-called fiscal cliff spurred sellers to finalize deals, Miller said. But the situation this year was also the result of a specific set of circumstances, Miller said, underscoring that we may not build on this activity in 2014.

“Leading up to 2013 … there was a lot of pent-up demand,” Miller said. “In the spring we had the spike in mortgage rates, and that got all the fence sitters into the market.”

  • Oouch

    Does Miller honestly state that record low inventories is actually a healthy sign? True it helps drive prices based on scarcity, but that can create an asset bubble market, which causes classic price collapses when teamed with periods of broader market instability. Inventories are low because the resale market has no leverage for trading up as borrowing qualification levels have been reduced. The product that has larger bedroom counts is often out of reach for the sellers who historically would have risked putting their apartments on the market. This is the real reason why the divergence between condos and coops is occurring. Fred Peters is correct in trying to jawbone that side of the market to lighten up their goals, but that often brings the question of how much is left in the pocket on the trade down.

  • Amol

    it shows that Manhattan property market was blooming when the rest of the country markets were at surge..

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