Manhattan’s residential market, which remains strong as the rest of the U.S.’s has slowed, is being supported by the top of the market and by low-end, first-time purchases, though brokers say they are seeing some weakness in the middle of the market.
Still, average sales prices are expected to increase for the remainder of 2007 as the number of homes for sale continues to decline sharply.
According to Jeffrey Jackson, co-founder of appraisal firm Mitchell, Maxwell & Jackson, the anticipated increase in average and median sales prices will be a result of more high-priced property sales.
“It’s my belief that there were more $10 million-plus sales this year than any other year,” Jackson said. “Large-ticket deals are driving the average and median sales prices up.”
Fueled by Wall Street bonuses and fortunes amassed through hedge funds, Darren Sukenik of Prudential Douglas Elliman also sees prices for the very top of the market continuing to rise.
“In the high end of the market, $3,000 a square foot was never a foreign concept, but now it’s such a commonplace in the market,” said the Elliman executive vice president. “When 15 Central Park West is selling for $6,000 a square foot, it’s apparent that the high end is really driving the market. Prices will continue to go up from there.”
But the middle tier of the market isn’t showing quite as much strength as the top.
“The market is stronger in the high and low end than the middle,” said Neil Binder, principal of Bellmarc Realty. “However, all segments show vibrancy.”
“The middle market isn’t dead, but things are moving slower,” Binder added. “There is more product available because of new construction.”
According to Binder, there is a solid market for sales in the $5 million and up range as well as for studios and one-bedroom units ranging from $300,000 to $600,000.
“There will be a continuing firming of prices,” Binder said. “If supply is adequate, things should stay stable. But there is pressure on pricing, and while it’s not dramatic, it is apparent.”
According to Sukenik, the market absorbs units in the $1,200 to $1,500 per square foot range more slowly because buyers have more options.
“There is a sluggish market for the cookie-cutter two-bedroom, two-bath units that buyers can find anywhere in Hell’s Kitchen and Chelsea,” Sukenik said. He said demand in the $1,700 per square foot range and up is solid.
“While prices of trophy properties will continue to increase, prices for typical average Manhattan properties will probably be flat to slightly up,” said Jackson. “It will be single-digit increases compared to the expected double-digit gains of the high-end market.”
A decline in apartments on the market should fuel price increases in the second half of the year.
In May, Manhattan’s inventory included 2,620 co-ops and 2,836 condos, for a total of 5,456 units, according to appraisal firm Miller Samuel. The total inventory represented a sizeable drop of 11 percent from 6,182 units the month before.
According to Miller Samuel, there was a 25.7 percent drop from this time last year, when there were 7,345 units on the market. “There has been a sharp drop in inventory volume,” said Jonathan Miller, president of Miller Samuel. “It’s interesting this year, [because] inventory through May tends to rise historically and not level off until June.”
Miller said the outlook remains good for higher prices for apartments in the second half of the year. While last year saw a 6.2 percent rise in apartment prices over the course of the entire year, Miller expects appreciation this year to exceed last year’s. “Overall availability of property is slipping and will translate into a higher pace of appreciation in the second half of the year,” he said.