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Mentioned in this Article:
Gregory J. Heym

Gregory J. Heym
Executive Vice President, Chief Economist

Wall Street Journal

Manhattan Apartment Prices Up Headed Higher

There is little relief in sight for Manhattan apartment hunters, brokers and analysts said, as low inventory and high demand have driven up prices to near or above record levels.

Prices in the first quarter rose across many market categories, with especially strong price growth in sales of new condominiums. The median price for a new condo rose to $1.73 million, up 30.6% from the first quarter of 2013, according to a market report by Douglas Elliman.

Brokers said that during much of the housing recovery, buyers had been very cautious about prices, which typically moved up and down in a small range. But with inventory falling to record lows, prices have pushed higher in the last few quarters, and now have surged still higher.

The Douglas Elliman report found that the median price of a Manhattan co-operative apartment set a record at $760,000 in the latest quarter, as did the median condo price of $1.355 million. The average price per square foot of $1,363 also was a record. The prices exceeded peaks set in 2008, near the end of the last real-estate boom.

"People have to be prepared to bid more than they want, sometimes more than the asking price," said Gregory J. Heym, the chief economist at Halstead and Brown Harris Stevens.

The median price of a Manhattan apartment was $972,428, up 18.5% over the same quarter in 2013, the Elliman report found. The average apartment price was $1.77 million, up 30.9%.

Jonathan Miller, an appraiser at Miller Samuel Inc. who prepared the Elliman report, noted that last year's first quarter was weak because sellers rushed to close on transactions before the end of 2012 to obtain of favorable capital-gains rates. But since then, he said, sales had been usually strong, while the number of listings contracted. There is now a 4½-month supply of apartments on the market, at the current sales rate. "With no relief in sight, we saw a pop in prices," he said.

Despite the rising prices, demand remained usually strong and broad, brokers said. Rather than driving buyers out of the market, the rise in prices, has convinced more people that it was a good time to buy, brokers said. "We are seeing the largest and most diverse group of buyers I have seen in my real-estate career," said Pamela Liebman, president of Corcoran Group.

Kirk Henckels, the director of Private Brokerage at Stribling & Associates, said that the market surge has given new hope to owners holding fast as their expensive co-op listings languished on the market. "They have not lowered their prices and they are getting bids now," he said.

Tuesday, April 01, 2014