The first part of the winter in New York City was unseasonably warm. So was Manhattan’s residential market in the last three months of 2006.
After a cooling-off period of more than a year as the housing boom receded, sales activity increased.
The uptick helped Manhattan’s various neighborhoods, but not uniformly. The Real Deal looked at which areas have fared best and worst in the post-boom market, and found some wide variations in Manhattan’s 16 neighborhood areas.
Upper Manhattan prices saw a bigger jump than any other section of Manhattan between the fourth quarter of 2005 and the fourth quarter of 2006, part of a decade-long rise in the area’s fortunes.
Washington Heights experienced the largest percent increase in average apartment price, hitting $543,100 in the fourth quarter of 2006. Harlem and East Harlem saw the biggest rise in average price per square foot, which some brokers view as the most reliable yardstick of the market; it climbed 43 percent, from $474 to $678.
The price information was provided by the appraisal firm Miller Samuel, which cautioned that price data can fluctuate more widely for individual neighborhoods than for Manhattan as a whole, because there are fewer sales to form a comparative basis. Included below are charts showing the number of deals collected for each neighborhood.
The big Uptown increases come at a time when the average Manhattan price continues to edge up incrementally, rising 3.2 percent from the end of 2005 to the end of 2006.
“In Harlem, the neighborhood is improving, and the quality of the product that is available is improving,” said Brett Grabel, an associate broker who works in the Harlem office of the Corcoran Group. “I think you can expect to see another increase.”
Frederick Peters, president of Warburg Realty Partnership, which has an office in Harlem, said prices would likely keep climbing and would be positively affected by the small resale market.
“Inevitably, in a less mature market, people are more influenced by how people are pricing the units than the history of sales, because there is little history,” Peters said.
After Washington Heights’ 92.4 percent gain in average sales price over the last year, Hamilton and Morningside Heights finished second with a 42.6 percent rise.
While the gains may seem astronomical, they jibe with long-term trends in the area.
According to a 2005 report by Miller Samuel, median apartment prices in Uptown Manhattan rose 349 percent from 1995 to 2004, going from $68,000 to $305,000 — twice as fast as in other parts of Manhattan.
Once-depressed sections of Downtown also saw a significant pickup in 2006, despite a slower overall residential market in Manhattan.
Co-op and condo prices in the Financial District climbed 21.5 percent for all of 2006 compared to all of 2005. (Full-year figures weren’t included in the charts because not all neighborhood information could be obtained as of press time.)
Trendy Soho and Tribeca also notched large gains. Average prices for co-ops and condos were 20.9 percent higher in the fourth quarter of 2006 versus the fourth quarter of 2005. The average apartment price reached nearly $2.5 million, higher than in any other neighborhood. The high average price is also a function of the typical apartment size in loft-dominated Tribeca, which runs larger than apartments in other neighborhoods.
In last year’s strong rental market, Soho and Tribeca fetched the highest average rents among Manhattan neighborhoods, too. According to Citi Habitats, fourth-quarter average rents for studios were $2,616; one-bedrooms hit $3,493; two-bedrooms, $5,079; and three-bedrooms came in at $8,772.
Warburg’s Peters said differences between the neighborhoods were emerging: “I don’t actually think they’re really the same market anymore.” Soho has remained steady, he said, but Tribeca has had a burst of activity.
Average prices per square foot were down in several prime neighborhoods, according to Miller Samuel. Between the fourth quarter of 2005 and 2006, the number dropped 2.3 percent in Chelsea, 2.6 percent in Greenwich Village, 2.8 percent on the Upper West Side, 2.9 percent in Midtown East/Turtle Bay and 3.9 percent on the Upper East Side.
For Manhattan as a whole, the average price per square foot was down 0.4 percent for the year, even while the average total price edged up a bit. The divergence between these two indicators was also seen with a number of neighborhoods, which may indicate that a few large sales drove up the average price while the average price per square foot remained unaffected.
Overall, the market ended the year on a positive note, with fourth-quarter sales up 55 percent compared to a year earlier, and inventory down, even if prices declined slightly for the quarter (see Big numbers bode well for ’07).
“The increase was likely due to the expenditure of record Wall Street bonuses and the continuing rise of new development,” said Jonathan Miller, president and CEO of Miller Samuel. “You’ll see more of that.”
The 2007 outlook for Manhattan real estate remains strong, and activity has been brisk since the beginning of December, said Peters.
Peters attributed price increases to the strength of the upper end of the market, which thrives on bonuses. “It’s the luxury product that’s bringing up the numbers,” Peters said. The ripple effect of two consecutive years of record Wall Street bonuses will show up in the first two quarters of 2007, though Peters cautioned that “bonuses in and of themselves are not the only market driver.”
Go to charts: Manhattan co-op and condo sales data, Q4 2005 vs. Q4 2006