Gregory J. Heym
Executive Vice President, Chief Economist
BUBBLE? WHAT BUBBLE? PRICES IN THESE HOT MANHATTAN AREAS SHOW NO SIGNS OF SLOWING DOWN
By ADAM BONISLAWSKI
April 20, 2006 -- THE numbers are in, and the New York City housing scene seems to be chugging along just fine, thank you very much. According to statistics from real-estate appraiser Jonathan Miller, the average price per square foot of Manhattan condos and co-ops rose more than 25 percent during 2005.
Data prepared by Halstead Property's chief economist, Gregory Heym, puts the average price of a Manhattan apartment at $1,258,420 - that's a 15 percent increase from only the fourth quarter of 2005. And the Corcoran Group's recent first-quarter market report shows that the median price of an apartment on the island has risen 12 percent since the first quarter of 2005, up to $798,000.
"Prices have gone up in most of the areas we look at - even from a year ago, when the market was very strong," Heym says. "The city's economy is doing well. Inflation hasn't turned out to be quite the problem that everyone thought it would be. Interest rates didn't shoot up like everyone thought."
And even neighborhoods that struggled a bit offered signs of hope. Midtown West's first-quarter numbers lagged behind the pack, showing a decline compared to the first quarter of 2005 in the average and median prices for studios and one- and two-bedrooms. However, strong numbers for larger units (the average price for three-plus-bedroom units rose 66 percent) made the area's average prices, as a whole, rise 13 percent.
While Heym says that an increase in inventory over the last year has allowed buyers to make their purchases at a more leisurely pace, he expects that the market will continue to grow, albeit at a somewhat slower rate.
In other words, the much discussed real-estate "bubble" still hasn't burst. On the contrary, the overwhelming majority of Manhattan neighborhoods saw housing prices continue on an upward track.
Even in a market with most everything on the rise, though, some spots will be hotter than others. Here are the city's five standout nabes.
- "One of the things that's very hot right now are loft apartments," Heym says.
In fact, the average price per square foot for lofts set a new record in the first quarter of this year, hitting $1,077 - a 21 percent increase from a year ago.
It's only natural then that a neighborhood known for its loft space would find itself rising with this tide. After all, as Heym notes, lofts are "a segment of the market virtually all of which is located downtown."
New construction has also helped bump up prices in TriBeCa. Upscale developments, like the Mohawk Atelier at 161 Duane St., have added fresh high-end housing stock to the neighborhood.
"You're getting a fair amount of new condo development in the area," Miller says, "and it's a level of product that's new to that area."
The numbers would suggest as much; the price per square foot climbed to $1,052 in the first quarter of 2006 - a 20 percent increase compared to the same quarter last year.
- A few blocks south, the Financial District is also booming. It's not the most happening of spots, but if you're a Wall Street type doing 16-hour days, living near the office can have its advantages. And with the bonus money flowing once again, all those Masters of the Universe in training have plenty of bucks to buy.
"We saw a record year for Wall Street bonuses - $21.5 billion," Heym says. "And that obviously helps that market a lot. I don't think anyone would say that we're completely dependent on it, but it certainly gives us a nice shot in the arm. And obviously, with all of these Wall Street bonuses, people are going to want a place close to where they work."
High-end developments, like Cipriani Club and 20 Pine, are rising to feed this market - pushing prices in the neighborhood further upward. The average price per square foot for area condos rose nearly 28 percent in 2005.
"There's a change in the type of housing that's coming up down there," Miller says. "The existing stock consisted mainly of smaller units and conversions. This is an upgrade."
- Chelsea has also seen an influx of high-end apartments, especially in its recently rezoned western reaches. Buildings like 555 W. 23rd St. and Vesta 24, at 231 10th Ave., have joined the neighborhood's ever-growing list of luxury developments - pushing per-square-foot condo prices up almost 27 percent in 2005.
"Chelsea has had momentum over the last several years," Miller says. "There's been movement up from areas like SoHo, the West Village. There've been a disproportionate amount of new developments in the neighborhood - particularly in West Chelsea - and those have helped to push up the prices."
"New development is driving the market right now," says Pamela Liebman, CEO of the Corcoran Group, "and Chelsea has had its share.
"It's very commutable. It's very accessible. There are great restaurants, great galleries, great shopping. Chelsea still has a real hipness to it."
- Hotter than just about anywhere, though, are the blocks between 42nd and 59th Streets, from Fifth Avenue to the East River. At least, that's what the numbers seem to say. In 2005, the average price per square foot of the area's condos went up a heady 38.7 percent. Who knew so many people wanted to live by Bloomingdale's?
Actually, though it certainly put forth a strong showing, the Midtown East market isn't quite that blistering. Sales in a few trophy buildings can go a long way toward bumping up a neighborhood's prices. In this case, big sales of apartments in the Davis and Milan buildings and Trump World Tower made the area's stats look especially impressive.
"We saw a couple of super-luxury projects that fell into that neighborhood that drove up prices," Liebman says. "Otherwise, there's still good value there."
The area is also on the rise, Miller suggests, because of its proximity to the more expensive Upper East Side.
"I think it probably benefited from being close to a higher-priced location," he says. "It became an option for people who were priced out of the Upper East Side."
- And then there are those who weren't priced out of the Upper East Side. That well-off bunch made the townhouse-lined blocks of Lenox Hill - located between East 59th Street to East 72nd Street, from Fifth Avenue to the river - one of the top-performing neighborhoods in the city, with prices per square foot rising a stately 27.4 percent in 2005.
"That's your traditional New York City neighborhood - the Upper East Side, prewar, the Gold Coast," Liebman says. "Families still love to live on the Upper East Side. You can never go wrong in that neighborhood."
"It's perpetually strong, and it always will be.
Thursday, April 20, 2006