Halstead Property

Mentioned in this Article:

Gregory J. Heym
Executive Vice President, Chief Economist

Manhattan Apartments Brush Off US Housing Slump

By Ilaina Jonas

NEW YORK - The Manhattan apartment market shrugged off the slumping U.S. residential market, as prices and sales rose in the second quarter and the number of apartments available for sale fell, according to reports released on Tuesday.

The median sales price rose to a record $895,000 or 1.7 percent higher than a year earlier and 7.2 percent higher than in the prior quarter, according to the Prudential Douglas Elliman Manhattan Market Overview second-quarter report.

The average price per square foot rose 5.2 percent to a record $1,139 versus the prior year's quarter and 6.4 percent more than in the first quarter.

However, the average sales price fell 3.8 percent to $1,333,316 from the year-ago's record $1,386,193 -- but up 3.3 percent from last quarter.

Wall Street bonus money, Europeans lured by the weaker dollar, an influx of baby boomers migrating from the suburbs and the city's strong economy attracts buyers from near and far.

"It's not any one factor. It's a number of factors," said Jonathan Miller, an appraiser and author of the Prudential report.

Miller attributed the difference between the average sales price and the average price per square foot to a jump in the market share of smaller apartments due to higher rental rates.

Studio co-operative apartment market share grew to 21 from 16 percent at the expense of two-bedroom units.

"Co-ops have always been been one of the primary entry points from the rental market," Miller said. "A year ago you had rent-versus-buy decision. During that year, rental rates went up 20 to 25 percent."

Meanwhile, a separate report from Halstead Property said prices set records with the average price of an apartment up 7 percent over a year earlier to $1,300,202 and the median price up 11 percent over a year ago to $840,000. The number of sales rose 31 percent and the supply dropped sharply, leading to the sharp rise in prices.

Miller attributed the differing results to the time at which each study obtains information about the sales.

SIZE SELLS

The greatest price gains were seen in larger apartments -- where 3-bedroom apartment prices rose 17.6 percent and 4-bedrooms rose 36.2 percent over last year, according to the Prudential report.

The Manhattan housing market was simmering all quarter, with the number of sales rising 104 percent to 3,939 from 1,934 units the prior year quarter, the Prudential report said.

Meanwhile, the number of homes available for sale fell 31.5 percent to 5,237 units from last year's second-quarter total of 7,640 units.

It took 117 days to sell a home in the quarter, four weeks less than last year.

Manhattan bucked the trend experienced by much of the U.S. housing market, which in May saw sales of existing homes slip to their lowest level in four years and the number of unsold homes on the market jump to its highest level since 1992. New home sales fell 1.6 percent.

For Manhattan, the average apartment price may trend even higher in the second half of 2007 as sales at very pricey condominium projects begin to close, Miller said. Although the second-quarter report contained some sales of apartments at the The Plaza, the next two quarters could be more drastically impacted by more sales, he said.

Additionally, apartment sales at Arthur and William Zeckendorf's 15 Central Park West are expected to begin closing later this year. At The Plaza and the Zeckendorf's properties, price per square foot averages about $3,500 to $4,000.

"It's going to be really interesting to see the numbers because they're going to be big," Miller said.

Tuesday, July 03, 2007