Gregory J. Heym
Executive Vice President, Chief Economist
BY BRADLEY HOPE
The average price of an apartment in Manhattan climbed to more than $1.3 million in the third quarter, according to the city's top brokerage firms, which released their quarterly reports yesterday. The latest numbers are misleading, however, because they are based on sales negotiated between April and June, before the credit crunch that is roiling the national markets took hold of the economy. A more accurate picture will emerge only next quarter or the first quarter of next year.
According to Corcoran, the average price was $1.414 million, a 14% increase over last year, pushed upward by a boom in high-end apartment sales. Calculations by Prudential Douglas Elliman show the average sale price decreased by 0.8% compared with last year, to $1.29 million. The brokerage firms use their own data to generate these reports, accounting for the differences in the conclusions.
"The mortgage fiasco will impact New York, but not severely," the president of Prudential Douglas Elliman, Dorothy Herman, said. The city is largely immune to the problems affecting most cities in the country because of foreign buyers, the large incomes of New Yorkers, and the prevalence of coops, which require stricter mortgages, Ms. Herman added. Still, confidence in the market has waned in recent months, and there is fear that Wall Street bonuses, which drive luxury sales, will get slashed because of losses at the major banks.
Although the general sentiment is that the city's market is mostly immune to a dramatic downturn, the firms are watching closely the results over the next two quarters. "If you see anything, you'll see it in the number of transactions," the director of research at Radar Logic, Jonathan Miller, the author of Prudential Douglas Elliman's report, said. "It's still a little early to know what is going to happen.
The number of deals in the third quarter shot up by 65.6% compared with the same quarter last year, to 3,939. If in the next quarter that number dips below 2,441, the number of deals in the fourth quarter in 2006, "we will know there is a problem," Mr. Miller said.
In the third quarter, the sales of luxury condominiums, Brooklyn townhouses, and downtown apartments saw the greatest growth compared with the same time last year, according to Corcoran. The average sale price of a luxury condo or co-op — which include the top 10% of sales prices in the market — increased 27%, to $5.115 million, the firm found. The average price per square foot in these apartments increased 18%, to $1,930.
"This was certainly the strongest year ever for luxury apartment sales," the chief executive of Corcoran, Pamela Liebman, said. "The luxury market is driving the sales in the city." This can be seen by the fact the average price of an apartment in the city was up 14%, or nearly three times the 5% growth posted for the median price, she said.
The growing number of families wanting to stay in the city but looking for the convenience of a brownstone drove the price of the Brooklyn brownstone market, Ms. Liebman said. A single-family home had an average price of $1.634 million, a 15% increase. The median price was $1.275 million, she said.
"Families that want to stay in the city but can't afford a home in Manhattan are going to Brooklyn," Ms. Liebman said.
While the average price per square foot for a downtown apartment rose by 22%, to $1,222, northern Manhattan — including Harlem and Inwood — saw only a modest increase of 2%, to $634, according to data from Brown Harris Stevens.
"That points to the strength of the new developments downtown," the chief economist of Halstead and Brown Harris Stevens, Gregory Heym, said. "But northern Manhattan didn't see the growth that other markets did, which may be because there were less of the high-price condos available this quarter."
Tuesday, October 02, 2007