Gregory J. Heym
Executive Vice President, Chief Economist
First-quarter reports show average selling prices in Manhattan between $1.26M and $1.31M prodded by Wall Street bonuses and interest rates
BY KIRA PEIKOFF
Newsday Staff Writer
Wall Street bonuses and interest rates that remained relatively low have helped buoy Manhattan apartment prices despite talk of a housing cooldown.
Several brokerages reported that average selling prices in January through March ranged between $1.26 million and $1.31 million.
"The market is steady, healthy, not overheating," said Dorothy Herman chief executive of Prudential Douglas Elliman, whose first-quarter report was to be released today. "You'll really have a strong indication of where the market is going to be by the end of the second quarter. My prediction is there will be a slight appreciation - steady, healthy, longer days on the market, but not a glut."
According to Prudential's first-quarter report, average apartment prices increased 7.1 percent to $1.3 million from the same quarter last year, compared with a 25.7 percent jump in the average price between the first quarters of 2004 and 2005. Prudential reported that while the price increases have eased, Wall Street bonus money bolstered sales of larger, more expensive units.
The median apartment price, a figure less likely to be skewed upward by a few very high-priced sales, rose 17 percent to $825,000 in the first quarter compared with the same quarter last year; the median price between the first quarters of 2004 and 2005 rose 18.5 percent, Prudential reported.
The results were in line with reports from The Corcoran Group, Brown Harris Stevens and Halstead Property.
Brown Harris Stevens and Halstead both reported that the average apartment price rose to $1.26 million last quarter, up 8 percent from the first quarter last year. That's modest compared with a 30 percent increase a year earlier - between the first quarters of 2004 and 2005 - but is still a 15 percent hike from the fourth quarter last year, when experts said some buyers were waiting for the market to drop. The two brokerages reported that median prices rose to $740,000 in the first quarter, up 6.5 percent from with a year earlier.
"People have realized interest rates aren't going to shoot up and prices aren't going to sharply decline," said Gregory Heym, chief economist for both Brown Harris Stevens and Halstead Property. "We're headed toward a more sustainable, healthy rate of growth, which I think is good for everybody. People and markets like certainty."
Heym said record Wall Street bonuses totaling more than $21 billion helped pump up prices. Overall demand remains strong, though experts predicted that the market would not continue to grow at previous sky-high rates of 25 percent to 30 percent.
"It's a more balanced market than it has been," Heym said. "It hasn't shifted from a seller's market to a buyer's market, but there's a little more flexibility there."
The Corcoran Group reported that the average selling price rose 8 percent to $1.31 million while the median sales price gained 12 percent to $798,000 between the first quarters of 2005 and 2006.
Pamela Liebman, chief executive of The Corcoran Group, cited strong sales of three-bedroom apartments, driven by demand from young families. Liebman also noted the success of hedge funds and Wall Street bonuses contributing to the demand for larger apartments.
At the same time, sales of smaller apartments - studios and one bedrooms - remained strong in the first quarter. Compared with a year earlier, the average sales price increased 22 percent for one bedrooms and 19 percent for studios, according to The Corcoran Group.
"This shows more people still prefer to buy than to rent," Liebman said. "They are driven by lower interest rates and the strong desire for home ownership."
Copyright 2006 Newsday Inc.
Tuesday, April 04, 2006