Diane M. Ramirez
Gregory J. Heym
Executive Vice President, Chief Economist
A ROBUST MARKET, WITH SALE PRICES AND RENTS INCREASING
From rental apartments to luxury co-ops, Manhattan represents a robust housing market, although it is not a frenetic as it once was.
“It’s continued to be a strong market, but the frenzy of the spring has abated,” says Elizabeth F. Stribling, president of an eponymous real estate brokerage firm.
In general, real estate experts credit the market’s reduced intensity to the slight rise in mortgage rates, as well as to increased buyer savvy about property values. As they tell it, buyers are less inclined these days to indulge in bidding wars to secure an apartment at any cost, although properties that are reasonably priced still generate a lot of interest.
“When it’s well-priced, a property will absolutely trigger multiple bids over the asking price,” says Diane Ramirez, president of Halstead Property.
A case in point: Because of multiple offers, a one-bedroom, two-bath co-op in Chelsea sold for $660,000, or $15,000 above its asking price, according to Toni D. Haber, senior vice president at Douglas Elliman.
“It doesn’t much matter whether a price is under or over $1 million. It just needs to be priced correctly to get the market of people appropriate for it,” says Ms. Haber.
Units in better condition tend to fetch higher prices.
“There are so many sellers out there who fell that people want to redo an apartment to their own taste, but something in mint condition will always command a higher price,” says Michele Peters, in-house counsel and director of sales and new development at Manhattan Apartments. For the most part, she says, prospective buyers don’t want to invest time and money in remodeling an apartment, since they can’t be sure how much the renovation will cost or how long the job will take to complete.
“It can be a nightmare,” says Ms. Peters.
Nevertheless, some buyers may find that they are forced to take whatever they can get, since demand for Manhattan housing continues to outstrip supply.
According to the Halstead Monthly Market Report, in the month of July—the latest figures available at press time—the number of new listings placed on the market increased a 4 percent from a year earlier. Growth was limited to the downtown market, where new listings jumped 24 percent, primarily because of conversions. During the same period, new listings on the West Side and East Side dropped 12 percent and 3 percent, respectively.
Thanks to the development of several high-priced condominium projects, including the AOL Time Warner Building and Trump Park Avenue, apartments priced at $10 million and up represent the only category to experience excess inventory, says Hall F. Wilkie, president of Brown Harris Stevens. “Otherwise, the market is extremely tight,: he notes.
As a result, the average price for a Manhattan apartment jumped 38 percent, to $1,072,475 in July 2004 from $777,628 a year earlier, according to Halstead’s figures. During the same period, the median price rose 30 percent, to $649,000 from $499,975.
Despite the escalating prices, Ms. Haber says that buyers shouldn’t be discouraged. “It’s still a great time to get into the market,” she says. “Interest rates are still historically low, between five and six percent.”
Condominium prices were especially strong in July. The median price for a prewar unit skyrocketed 43 percent, to $930,500 this year from $650,000 in July 2003. The median price of a postwar condo rose 39 percent, to $750,000 from $540,000, according to Halstead.
Two-bedroom units on the East Side experienced the largest percentage gain in median sales price: 44 percent, to $1.2 million from $831,000. Family units—apartments with three or more bedrooms—on the West Side were the only market segment to experience a decline in price, although the drop was slight; their median sale price fell 1 percent, to $1,650,000 from $1,675.000.
Within the studio category, downtown units not only recorded the highest median price— $342,000—but also experienced the largest percentage gain, 27 percent. Among one-bedrooms, East Side units enjoyed the greatest percentage increase in median price—29 percent, to $490,000 from $380,000. But the West Side represented the most expensive market for one-bedrooms, with a median of $499,500, a 14 percent increase over the year-earlier figure of $440,000.
“The market is not as seasonal as it used to be,” says Gregory Heym, chief economist for Terra Holdings, parent company of Brown Harris Stevens and Halstead Property. “While some buying related to the school year, we are now seeing a lot more young and first-time buyers, as well as people trading up in neighborhoods in which they are already living.”
With the sales market remaining strong, many new projects are underway in the borough, including two upscale, East Side condominium developments.
The 76-unit Park Avenue Place, a Davis/RFR development slated for occupancy in December, features studio, one-two-and three-bedroom apartments. Prices range from $675,000 for a 446-square foot studio to $9 million for a three-bedroom, three-and-a-half-bath penthouse. The first five floors of the development will house a 23,000-square-foot private club with meeting, dining and screening rooms and a fitness studio.
Located on the former site of the Baronet and Coronet movie theaters, 205 East 59th St. is a 27-story, 62-unit complex. Nearly half of the apartments feature 20-foot ceilings and solariums with full-height glass frame windows. Communal amenities include a fitness center and a puppy park, as well as retail shops. Prices range from $1.4 million for a one-bedroom, one-bath unit to $3,018,000 for a three-bedroom, three-bath unit. A penthouse unit with three bedrooms and three-and-a-half bathrooms, as well as 1,156 square feet of outdoor space, is priced at $10 million. The development is scheduled for completion in the spring.
Along with the continued strength of the sales market, the rental arena, after several flat years, has begun to rebound. Experts say the shift is due to new jobs in the well-paying legal and financial arenas, and to the dearth and high prices of condominiums and co-ops.
“Anyone on the fringe, who got burned or discouraged, is now going back to the rental market,” says Ms. Ramirez.
As a result, many property owners are no longer wooing prospective tenants with rent-free periods, says Laurie Zucker, vice chair of Manhattan Skyline Management Corp., a division of The Zucker Organization and the developer of the 205 East 59th St. project.
The market’s recovery was already evident five months ago. Between November 2003 and April 2004, the average rent for a studio increased 4 percent, to $1,668 from $1,600 during the same period a year earlier, according to Citi Habitats’ most recent figures. At the same time, the average rent for a one-bedroom grew 1 percent, $2,309 from $2,268 the year before.
“The rental market has turned the corner,” says Andrew Heiberger, president of Citi Habitats. “I expect this winter to be one of the best in recent years for the rental market.”
Monday, October 03, 2005