The Fourth of July has come early to the residential real estate market. “You have a surge in demand meeting a chronic low level of supply and the result was fireworks,” said Jonathan Miller, president of appraisal firm Miller Samuel.
Indeed, the Manhattan apartment sales market had its most active spring since 2007, with the number of transactions jumping in tandem with a continued inventory crunch, reports released today by Manhattan residential brokerages show.
In the second quarter, 3,144 sales of Manhattan condominiums and co-ops closed, a dramatic 18.8 percent increase over the prior year and a 28 percent increase from the prior quarter, according to Douglas Elliman’s report, prepared by Miller.
Looking ahead, the number of sales is likely to climb, given that buyers signed 4,450 contracts for Manhattan apartments in the second quarter — the highest in a single three-month period since 2007, according to the Corcoran Group’s quarterly report.
Corcoran CEO Pamela Liebman attributed the surge to seasonal trends, noting in a statement that the second quarter is traditionally the “busiest quarter of the year for Manhattan sales.”
However, at this point, prices are rising only modestly. The median price for a Manhattan apartment in the second quarter was $865,000, a 4.3 percent year-over-year increase from $829,000, the Elliman report shows.
Hall Willkie, president of Brown Harris Stevens, pointed out that many of the biggest sales this year have taken place at new developments where deals have not yet closed, meaning that the transactions were not included in market reports.
“That has a major impact on pricing,” he said.
Indeed, by some accounts prices in the luxury market — the most expensive 10 percent of sales — declined compared to last year.
The median price of a luxury apartment was $3.85 million this quarter, or 4.94 percent less than at this time last year, when it was $4.05 million, according to a report from TOWN Residential.
Wealthy sellers are “taking the time to receive their desired prices,” the report said.
However, the Elliman report said the price of a luxury apartments rose 3.1 percent year-over-year, to $4.2 million from $4.08 million.
At new developments, the average price per square foot rose 16 percent year-over-year to $1,327 from $1,146, according to Halstead Property’s report, which uses the same data as sister brokerage Brown Harris Stevens.
Downtown was the only market to see price growth across all apartment size categories, though three-bedroom and larger units experienced the highest rate of growth, Halstead’s report shows. Downtown, prices increased 33 percent from $3.62 million to $4.81 million year-over-year, the report shows.
Diane Ramirez, the newly minted CEO of Halstead, attributed the performance to the growth of the area’s tech sector, the expansion of New York University and increasing employment levels.
Overall, however, the market shows no signs of slowing. Rising sales and falling inventory led to the fastest absorption rate on record, the Elliman report noted. This quarter, the absorption rate was just 4.6 months, a 41.8 percent decline from 7.9 months during the second quarter in 2012, the Elliman report shows.
Apartments spent 102 days on the market on average, an 18 percent decline from the previous year, according to Brown Harris Stevens’ report.
Part of the reason for the faster rate was that inventory continued to drop, forcing buyers to act quickly.
Available apartments in Manhattan fell 31.3 percent to 4,795 units from 6,981 units in the second quarter of 2012, marking the lowest number of any second quarter on record, the Elliman report shows.
Inventory is 52 percent below its peak in the first quarter of 2009 and on par with listings available in the first quarter of 2005, the Corcoran report says.
The recent increase in mortgage rates had no impact on this quarter’s results, the reports said. In the future, however, rising rates are expected to “temper [the] pace of sales and price growth,” Elliman’s report said.
“You’re seeing housing prices across the U.S. rise sharply. We’re seeing modest [price] growth [in New York], but it’s not sustainable,” Miller said. Rising mortgage rates “take some of the edge off the upper trajectory of pricing, and that’s a good thing if you’re a fan of having a long-term recovery.”
According to StreetEasy’s quarterly report, 2,426 of 12,494 apartments listed in Manhattan experienced price cuts this quarter, 32.7 percent less than the second quarter of 2012. Meanwhile, sellers increased prices at 815 listings, a 20.4 percent year-over-year increase.