April 1 (Bloomberg) -- Manhattan apartment sales surged in the busiest start to a year since 2007, setting price records as buyers vied for a limited supply of homes for sale and deals were completed at new high-end developments.
Sales of co-ops and condominiums in the first quarter jumped 35 percent from a year earlier to 3,307, according to a report today from appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. The median price climbed 19 percent to $972,428, while the the average price per square foot rose 24 percent to $1,363, the highest in 25 years of record-keeping.
Price gains are accelerating in a market where the inventory of homes for sale plummeted to record lows three times in the past year as buyer demand increased. Of the deals completed in the first quarter, 38 percent were at or above the asking price, up from 17 percent a year earlier, according to Jonathan Miller, president of New York-based Miller Samuel.
“We’re finally at a point where you’re seeing the chronic lack of supply push prices higher,” Miller said in an interview. “The market really isn’t fun for the buyer.”
There were 4,968 apartments for sale at the end of March, up 0.2 percent from a year earlier and the first inventory increase in more than three years, the firms said.
About 50 percent of deals in the quarter were completed with cash, Miller estimated. The median price of all sales was about 5.1 percent below the peak reached in the second quarter of 2008, according to Miller Samuel and Douglas Elliman.
Transactions at newly constructed buildings set a record, averaging $1,834 a square foot, the firms said. Many new condo towers have larger units and are aimed at luxury buyers.
Completed deals at Extell Development Co.’s One57 in Midtown, as well as downtown’s One Madison and Chelsea’s Walker Tower, all averaged more than $3,000 a square foot, according to a separate report today by brokerages Brown Harris Stevens and Halstead Property.
The quarter’s two sales for more than $40 million were both penthouses in new developments -- a $43 million purchase at One Madison and a $50.9 million deal at Walker Tower that set a downtown record. In all of last year, only one completed transaction crossed the $40 million threshold, according to Gregory Heym, chief economist at Terra Holdings LLC, owner of Brown Harris and Halstead.
Older properties weren’t left behind. Resale prices averaged $1.47 million, a 19 percent jump from a year earlier, Heym said.
“There’s been a real escalation in prices,” he said. “We knew it was going to come and now we’re starting to see it. The biggest question is why it took this long.”
Stefanie Wolf and her husband put their apartment in an Upper West Side brownstone on the market after seeing how well their neighbors fared selling properties in the past year. The couple, who have a 5-year-old and a 1-year-old, had outgrown the two-bedroom, one-bathroom co-op.
The apartment was listed for sale at $1.195 million in October and was on the market for 38 days before going into contract, according to real estate website StreetEasy.com. While at least two offers came in above the asking price, the couple preferred to sell for less -- $1.15 million -- to buyers who offered cash.
“It was really quick,” said Wolf, 37, an audiologist in private practice on Long Island. “They wanted it, and they wanted to start their renovations.”
Proceeds from the sale of the co-op, which the Wolfs acquired from a family member in 2008, helped them chip away at student loans and make a down payment on a five-bedroom home on Long Island, she said.
On the Upper West Side, the increase in average prices ranged from 10 percent for two-bedroom apartments to 24 percent for one-bedroom units, according to the Brown Harris and Halstead report.
“I have buyers who need to finance, and unfortunately they find themselves losing out a lot to cash deals on a regular basis,” said Scott Harris, a broker with Brown Harris Stevens who handled the Wolfs’ co-op sale.
Other reports issued today showed jumps in prices amid a decline in available homes for sale. StreetEasy.com said inventory dropped 13 percent to the lowest level since 2007. The median sale price jumped 17 percent from a year earlier to $900,000, according to the site, which is owned by Zillow Inc. Properties spent 89 days on the market, down from 137.
Brokerage Corcoran Group reported a 25 percent surge in completed deals from the first quarter of 2013. The median price of the 3,263 properties that changed hands climbed 18 percent to $943,000. The average price per square foot reached a record $1,276, up 20 percent from a year earlier.
Inventory declined 17 percent to 5,466 units on the market at the end of March, according to the brokerage. It was the 12th consecutive quarter of year-over-year declines.
“We’re seeing basic Econ 101 coming into play,” Pamela Liebman, chief executive officer of Corcoran Group, said in an interview. “When you have this much demand and so little inventory, prices will have to rise. And they have.”
On the Upper East Side, previously owned condos sold for a median of $1.35 million, up 34 percent from a year earlier, according to Corcoran. In new developments in the neighborhood, the median price more than doubled to $3.60 million.
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