In the first quarter of 2006, for the first time in five years, condominiums outsold co-operatives in Manhattan. That shift is probably a one-shot deal, according to market analysts, because of the number of newly developed condos going on sale and the recent record Wall Street bonus season. Co-ops remain the dominant type of for-sale housing in Manhattan.
Still, the rare condo bounce says much about the current Manhattan housing market, where the average sales price of an apartment was $1,236,287 in April, according to a report from Halstead Property, a decrease from the $1,326,879 average in March. The median April sales price was $722,500, also a decrease from March, when it was $751,743.
“There are no bad neighborhoods now, if you think about it,” said Toni Haber, an executive vice president at brokerage Prudential Douglas Elliman. “And a lot of that has do with condos.”
A condo development wave has swept Manhattan this decade. In 2005, at the wave’s crest, at least 9,000 condo units were approved by the state attorney general’s office for sale. Haber said these newer condos have been more attractive to buyers recently, partly because of what they have — amenities — and also what they don’t have — co-op boards. These boards can make a co-op purchase a particularly arduous task involving in-depth financial and personal vetting that even some affluent buyers can’t withstand. One brokerage head, who described a typical co-op as “a nation unto itself,” says this vetting can particularly dissuade from co-ops foreign buyers looking to leverage stronger currencies than the dollar.
Enter condos. They’ve also got the added advantage of being easier to price, brokers say, because of the usually secretive nature of financials in co-ops. This can be especially helpful in gauging price appreciation in both individual condos and in entire condo developments.
But, even with these advantages for brokers, it’s not as simple as build it and condo buyers will come. Haber, for one, said in her 23 years in New York real estate she had never before seen condos outselling co-ops. “There just weren’t that many of them,” she said.
In every year this decade, co-ops have easily outsold condos in Manhattan, according to appraiser Miller Samuel (see chart). Nearly two-thirds of all apartments sold in the borough in 2002 and 2003, in fact, were coops. In 2005, about 56 percent of the year’s 7,780 apartment sales were co-op sales. Of the 2,005 apartment sales closed in the first quarter of 2006, 46.5 percent were co-ops.
Imagine, though, a Manhattan where condos consistently outsold co-ops. “If better than 50 percent of our sales were condos, it would make the process of doing brokerage faster,” said Eric Lustgarten, president of brokerage William B. May Company. “It would also probably increase the level of properties that change hands, strictly because condominiums are a more liquid commodity than co-ops. In a hot market, condominiums are like cash.”
But the Manhattan market, of course, isn’t as hot as it once was.
In addition to both median and average apartment sales price decreases in April over March, according to Halstead, inventory was up on the West Side and in Downtown. Listings for two-bedrooms Downtown, for instance, were up 67 percent from April 2005 to April 2006. Listings for West Side studios jumped 28 percent year-over-year, and listings for larger apartments Downtown — four bedrooms or bigger — went up 50 percent.
A first-quarter market report from Miller Samuel revealed the number of Manhattan apartment listings jumped by 16 percent over the end of last year — and by 60 percent from the first quarter in 2005. And any price increases of the first quarter were spurred not mostly by an overall pick-up in sales activity, but by the record Wall Street bonus season in December and January, with bonus-flush buyers generally purchasing larger apartments.
Despite the slowing sales market, however, condos keep growing in Manhattan. High-profile projects like 15 Central Park West, where sales recently passed $1 billion, and 20 Pine Street mingle with lesser-known developments like the Ariel West and East on the upper end of the Upper West Side. Prices, too, for condos remain high, according to Halstead. The median price per foot for a postwar Manhattan condo was $999 in April, about the same as the $1,039 a foot in March. For prewar condos, the median price per foot in April was up $14 over March to $1,088.
This strength in condo prices, though, will not translate into a repeat of the first quarter, when condos trumped co-ops. The slowing sales market and the disproportionate number of co-ops — they represent about 70 percent of for-sale housing in Manhattan — will once again tilt sales toward co-ops. Still, it’s nice for some brokers to imagine a Manhattan where condos are king.
“It would make it a lot easier for us,” Lustgarten said. “It would streamline my business.”