After Record High, Apartment Prices Slip

The average sales price of a Manhattan apartment dipped slightly in the fourth quarter from previous record highs, while listing inventory continued to contract.

The average price of a Manhattan apartment was $903,259, down 1.5 percent compared to the quarter before, which was the first time the average sales price had crossed $900,000, reaching $916,959.

Despite the dip, sales prices were still 11.7 percent higher than during the fourth quarter of the year before, according to Jonathan Miller, president of the appraisal firm Miller Samuel Inc. and the author of the Douglas Elliman Manhattan Market Overview.

The median Manhattan price, meanwhile, inched up .9 percent to $580,000, a new record for the study, exhibiting how prices remained at or close to record levels.

While condominiums posted a gain in average sale price, co-ops, luxury apartments, and lofts all saw declines in average sales price.

Meanwhile, the number of apartments available for sale has continued to contract, with listing inventory declining nearly every month for the last nine months.

Overall apartment inventory was at 4,843 units for the fourth quarter. This represented a 7.3 percent decline from the third quarter total of 5,224 and a 19 percent drop from the prior year quarter total of 5,977.

The numbers were the first time apartment inventory has fallen below the 5,000 mark since the second quarter of 2002. Low inventory is partly due to lack of significant conversion activity and continued emphasis on the rental market in development, according to Miller.

The number of sales declined in the fourth quarter as well, though they remained at a high level, according to the report.

Sales volume fell 2.9 percent, with 2,256 sales in the fourth quarter, compared to 2,324 sales in the third quarter.

The number of sales was still 11.2 percent above the prior year fourth quarter total of 2,028.

The report also noted that the financial markets rebounded sharply during the fourth quarter, creating the likelihood of additional hiring by Wall Street firms in the near term and positively affecting the local real estate market. Mortgage rates generally trended downward over the quarter. More recently, in mid-January, interest rates on U.S. 30-year fixed-rate mortgages reached their lowest level since mid-July.

Real estate analysts project a modest uptick in mortgage rates over the year as the economy improves, Miller said. This may be fueling the high level of demand seen this quarter as consumers worry they will miss out on low mortgage rates, he said.

Condominium Market

The average sales price of a Manhattan condo increased 1.1 percent to a record $1,159,808, which was also 13.9 percent higher than the prior year quarter, the report said.

For the first time, the average price per square foot exceeded $800. The average price per square foot was $822 in the fourth quarter, a 4.2 percent rise compared to $752 per square foot the quarter before.

Prices increased for larger apartments, while prices for smaller apartments weakened. The average sales price of a condo studio and 1-bedroom fell 3.4 percent and 6.6 percent, respectively. The average sales price of a 2-bedroom and 3-bedroom unit rose 7.2 percent and 13.2 percent, respectively.

Sign Up for the undefined Newsletter

Listing inventory fell to its lowest level in more than a year. The number of apartments available for sale fell 3.4 percent, to 1,695 from 1,754 during the quarter before. The lack of inventory may be constricting the number of sales, which fell 6.8 percent, the report said.

The average price per square foot for the West Side showed the largest increase, rising 12.3 percent. The Downtown market saw price per square foot increases of 5.9 percent. The East Side market was relatively unchanged.

For 2003 as whole, West Side condominium developments appreciated a whopping 40 percent, according to a recent Corcoran Group report, which included the record-breaking sale of a $45 million apartment at Time Warner Center. Downtown, average condo prices were up 9 percent in 2003, according to the report.

Co-op Market

The average sales price of a Manhattan co-op apartment fell 2.5 percent to $776,514 from the record price level of $796,174 set in the prior quarter, the Miller Samuel report said.

Market share for 1-bedroom apartments surged by 9 percent. A loss in market share for the studio and 2-bedroom segments, by a corresponding 9 percent, was partially attributable to the drop in listing inventory, making the availability of apartments more limited, the report said.

Studio apartment prices surged 10.6 percent. Upper-end apartments showed weakness, with the average sales price of a 3-bedroom apartment declining 4.3 percent.

The number of days it took to sell a co-op apartment continued to fall throughout 2003. The average days on market fell to 132 days in the fourth quarter, compared to 137 days in the prior quarter.

Luxury Market

The average sales price for the luxury market, defined as the top 10 percent of all co-op and condo sales, showed a 7.8 percent decline from the prior quarter.

Despite the decline, the average sales price of $3,190,329 remained higher than quarterly averages for this market segment over the past two years.

Overall, price levels in the luxury market are relatively stable and median and average sales price declines were largely attributable to the smaller size of luxury apartments sold during the quarter, the report said. The average square footage of a luxury apartment fell 6.9 percent to 2,516 square feet in the fourth quarter.

Loft Market

A drop in average apartment size also contributed to a decline in median and average sales prices in the loft market in the fourth quarter.

Loft apartments averaged 1,830 square feet for the quarter, which was the smallest size seen since the same quarter two years ago.

As a result, the average sales price fell 4.6 percent to $1,365,038 from $1,430,879 in the prior quarter. However, the average price per square foot of a loft apartment set a record, coming in at $746.

The number of loft sales rose 1.4 percent, even while listing inventory posted an 18 percent drop, the report said.

Recommended For You