Gregory J. Heym
Executive Vice President, Chief Economist
By Ilaina Jonas
NEW YORK (Reuters) - Manhattan apartment prices rose 6.6 percent per square foot on average in the first quarter from a year ago, bucking a broad U.S. decline as Wall Street bonuses boosted buyer income, according to a leading market report.
The overall selling price in Manhattan dipped, however, due to sales of smaller units.
The average price of an apartment with four bedrooms or more rose 24.8 percent year-on-year to $8,957,570, according to the Prudential Douglas Elliman's Manhattan overview report released on Tuesday.
"This is further evidence of the bonus money driving demand in New York," said Jonathan Miller, an appraiser and the report's author. "But it's not just bonus money."
New York City's economy also is doing fairly well with low unemployment and a city budget surplus, while the weak dollar helps attract foreign buyers.
During the first three months of the year in the Manhattan residential real estate market, sales surged, inventory declined, prices rose and marketing times shortened, several reports showed. The rise in demand helped slash inventory, reduce marketing and trim listing discounts.
"In many ways, it's in sharp contrast to the national housing market, which is having issues with oversupply, weakness at the high end (and) markets that underwent tremendous speculation that are now underwater," Miller said.
Sales of existing U.S. houses rose in number in January and February, but median prices were down from a year earlier for the seventh straight month, according to the National Association of Realtors. Meanwhile, the number of homes on the market continued to pile up.
As for new houses, both sales and prices have fallen compared with a year earlier, according to the U.S. Commerce Department.
NEW YORK CHARGES AHEAD
In Manhattan, the number of sales in the first three months of the year rose 73.3 percent from a year earlier to 3,474 units, according to the Prudential report. The surge was due partly to the inclusion this year of more information related to cooperative apartments, Miller said.
While the average sales price decreased 0.8 percent to $1,290,391, the median sales price -- in which half the sales were higher and half were lower -- rose 1.2 percent to $835,000.
The average price per square foot rose 6.6 percent to $1,070, according to the Prudential report.
The number of homes on the market fell 14.2 percent, to 5,923. On average, it took 131 days to sell an apartment, a week faster than the same period last year.
A similar report by Halstead Property showed that the median price rose 4 percent to a record $770,000 while the average price fell 3 percent to $1,218,064.
"That's showing that the entire market is doing better and is not being carried by the high end," said Gregory Heym, chief economist for Halstead Property. "Even though the prices of luxury apartment were way up, they're not accounting for a bigger percentage of sales."
According to the Corcoran Group, the average sales price rose 4 percent to $1.36 million, while the median price rose 5 percent to $840,000 and the price per square foot was up 4 percent to $1,053.
New York has some protection against a nationwide rise in homeowner defaults.
About a third of the apartments in Manhattan are cooperatives, with boards that traditionally have held prospective buyers to much higher financial bars.
"If anything, the banks are more lenient than the co-op boards," said Dottie Herman, president and chief executive of Prudential Douglas Elliman.
But experts are concerned that the tighter lending standards that may result from the mortgage meltdown in parts of the market still could crimp the New York market.
"I do think -- and I see it already -- it is going to tighten lending," Herman said.
Additionally, Miller said he is concerned about new construction coming onto the market and slowing down the pipeline.
"A year ago, I would have expected by now to see some of the supply abating, but it doesn't seem to be slowing down," Miller said.
© Reuters 2006. All rights reserved.
Tuesday, April 03, 2007