Gregory J. Heym
Executive Vice President, Chief Economist
Much has been made of the feud between Manhattan's two most money-sucking luxury developments, the Plaza and 15 Central Park West, but the dynamic duo have finally decided to unite for a common cause: lifting the Manhattan market to unseen heights. The major brokerages released their Q4 sales reports yesterday, and numbers were up. Way up. The average price of an apartment reached $1.4 million, up about 18% from the final quarter of 2006, and slightly above last quarter's average of $1.37 million. All of the brokerages agreed that the market was being inflated by the bullish luxury sector, specifically the Plaza and 15 Central Park West, which accounted for a combined 7% of Manhattan's 1,342 condo sales in the quarter. The average price of those Plaza/15 CPW closings? Nearly $7 million. Uh, yeah, that'll drive up those numbers. By about $500,000, according to the Halstead/Brown Harris Stevens economist who prepared the reports.
Three months ago, excitement over the third-quarter reports was somewhat dulled by expert analysis that claimed the numbers were inflated by huge Q2 deals that didn't close until Q3, and Q4 would be the real indicator of the market's overall health. If that's the case, it is time to finally pop the champagne. The amount of sales went up 3.2% over the last quarter of 2006, inventory went down and price-per-square-foot was up 3.1% over the third quarter of 2007. Yeehaw! But, as is custom with these reports, the monster numbers were accompanied by some grim predictions for the immediate future.
For one, there's the national slowdown that most think will eventually sink its claws into Manhattan. Also, predicted layoffs and cutbacks at Wall Street firms in 2008 should stall that blockbuster luxury market a bit. Third, the Sun points out that while the dollar value of apartments keeps going up, their value in gold is plummeting, or something. And last but not least, foreign investors will no longer be able to pay for Manhattan condos with boxes of Jammie Dodgers and a wink. That may also have an effect.
Even Elliman's Dottie Herman thinks the salad days may be somewhat spoiled. She told the Times: "I’m not forecasting high appreciation [in 2008]. I’m forecasting that the market will be flat." Sounds a lot like what the Wall Street Journal was trying to tell us around Thanksgiving, no? But the future is unwritten, said some old dead British guy with a guitar, so for now: Bentleys for everyone!
Thursday, January 03, 2008