Judging by the numbers released in a first quarter sales report, the Manhattan sales market is nothing if not reliable. The market exhibited stability on both a quarterly and yearly basis, and one could argue that this consistency is its defining trait. In the context of heightened economic uncertainty caused by S&P’s downgrade of U.S. debt, the debt crisis that gripped the Eurozone, a volatile stock market, a credit crunch, and concerns about the state of Wall Street bonuses, this stability is all the more impressive. The ability of Manhattan luxury apartments to weather harsh economic conditions bodes well for the future because it further cements their reputation as safe investments. Plus, the low-end of the sales market is flourishing, serving as the engine for market activity in the first quarter; it's been strong enough to carry the market through these rough waters.
The quarterly sales survey, published by Prudential Douglass Elliman Real Estate, documents many nominal changes in condo and co-op sales, but the dominant theme in both markets is consistency with recent years. For condos and co-ops, the median sales price was $775,000, just 0.9% below the $782,071 price of the prior year quarter, but both average sales price and price per square foot increased. Active inventory saw a slight decline during that same period, falling 0.6% from 7,605 to 7,605 listings available. The quarterly average for Manhattan luxury apartments listed on the market is 7,478 over the past 10 years, and, more importantly, the average price of Manhattan apartments rose 80% during that 10-year period. Buyers should take note that even though prices are still 10% off their market peak in 2008, they are still appreciating in value over the long-term. Another reason to be optimistic: the city Finance Department estimates that the value of Manhattan properties will increase by 5.9% over the course of this fiscal year.
One of the more notable changes was that the average time for Manhattan luxury apartments on the market rose from 127 days to 152 days from the prior year quarter. This slowed sales pace suggests that sellers are pricing their apartments higher than the market can support. This idea is also supported by the fact that demand for high-end apartments for sale was bolstered by an uptick in employment numbers in New York City. Plus, concerns over the decline of the financial sector and the effects of the international debt crisis proved unfounded. International buyers and local Wall Street buyers are still contributing greatly to the Manhattan real estate sales market.
The only major change in the market was a good one: sales of studios and one-bedroom condos in Manhattan took up a much more significant portion of overall sales because of historically low interest rates. Sales of studio condos and one-bedroom condos in Manhattan jumped from 38.8% of all sales in the first quarter of 2011 to 48.1% this year. The luxury sales market also displayed viability in sales of three-bedroom condos in Manhattan; their market share almost doubled by reaching 19.7%.
The report documents numerous other changes in Manhattan’s specialized sales markets, so we encourage you to take a closer look at the ins-and-outs of the first quarter. But as we have already written about, we predict increased activity in the second and third quarters of this year, so there’s no reason to doubt the continued success of residential real estate in Manhattan.