Manhattan Apartment Prices Reach Highest Since 2008 Peak

Manhattan apartment prices jumped to the highest point since their 2008 peak as buyers competed for a limited supply of homes and deals were completed in new luxury developments.

The median price of all condominiums and co-ops that changed hands in the fourth quarter was $980,000, up 15 percent from a year earlier, according to a report today by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. The price was the second-highest in 25 years of data-keeping and the costliest since the second quarter of 2008, when the median for all transactions was $1.03 million.

“With the direction the market seems to be going, that record could be broken in 2015,” Jonathan Miller, president of New York-based Miller Samuel and a Bloomberg View contributor, said in an interview.

Price gains are accelerating as demand from domestic and international buyers alike outpaces the number of properties for sale. There were 4,995 apartments on the market at the end of December, up 20 percent from an all-time low a year earlier. The inventory is still 30 percent below the 10-year average for the number of homes for sale in a quarter, Miller said.

Listings in newly constructed buildings, which tend to be larger and more expensive, more than doubled to 1,440 in the fourth quarter, while inventory in the resale market, where prices are lower by comparison, climbed only 2.9 percent to 3,555, according to Miller.

Resale Pressure

New developments accounted for 10 percent of all sales in the quarter, he said.

“Roughly 90 percent of the housing market is not seeing new housing stock,” Miller said. “The resale market is where inventory is probably going to remain inadequate and that’s where you’re going to see more of the price pressure.”

There were seven purchases the quarter for $30 million or more, compared to a single deal in that range a year earlier, Miller said. Sales for $10 million or more than doubled to 39.

About half of all buyers who completed deals in the quarter agreed to pay the asking price or higher, according to the report. The average amount paid over the listed price was 3.9 percent, Miller said.

Urban Compass

Brokerage Urban Compass, in its own report today, said the median price per square foot in the quarter reached an all-time high of $1,459, exceeding the peak in 2008 by 19 percent.

The record gains of 2014 mean that apartment prices will level off or decline in the coming year, with the median for deals that close in 2015 slipping as much as 3.7 percent, the brokerage projected.

“This type of price growth has not been sustainable in previous years,” Urban Compass, a startup where data scientists and engineers collaborate with agents on listings, said in its report. “Following huge gains, price growth has typically witnessed a return to normal growth rates, if not a price decline.”

For the owners of a co-op on the Upper East Side, the surging market meant they were able to sell their property for almost 10 percent more than what they paid just four months earlier. The couple, based in South Carolina, bought the apartment for $2.33 million in June, anticipating a move to Manhattan, said their broker, Linda Feder of Corcoran Group. When their plans changed and a move up north was off the table, Feder persuaded them to relist the home rather than rent it out.

Right Price

After a fresh coat of paint and a re-marketing of an office space as a third bedroom, Feder listed the co-op for $2.6 million in July. The price was right for Debra and Donald Duford from La Jolla, California, who were looking for a pied-a-terre in Manhattan after selling a condo in New Jersey, Debra Duford said in an interview.

Debra and her husband, who recently retired as the chief executive officer of workers-compensation contractor One Call Medical, set an initial budget of $2 million. They raised that limit after Debra spent hours searching online and found nothing suitable in that range.

“It was a shock,” she said in an interview. “A lot of dated interiors and that little galley kitchen that hadn’t been torn out.”

She kept coming back to Feder’s listing, and scheduled to see it. The Dufords put in their offer a few days later, didn’t seek financing, and closed the deal in October for $2.55 million. That the previous owners were able to resell at a 9.7 percent higher value after four months was evidence that they bought at a good time, Debra Duford said.

‘Get Moving’

“It told me that things are picking up and we’d better get moving,” she said. “It told me that it’s just a dynamic market now, and that you’d better grab what’s talking to you when you can.”

Co-ops accounted for 58 percent of all signed contracts in the fourth quarter, the highest share in more than five years and a reflection of the scarcity of affordable condos, Corcoran Group said today in a separate report on the Manhattan market. The number of co-ops listed for sale fell 4 percent from a year earlier as buyers kept pace with the new inventory, the brokerage said.

Prices across all property types and neighborhoods climbed 5 percent in the quarter to a median of $916,000, Corcoran Group said.

Widespread Demand

“Everybody wants in,” Pamela Liebman, president of Corcoran Group, said in an interview. “It doesn’t matter if you’re a single person, a couple, a family, someone from New York, someone from China, someone from Los Angeles, someone from the Midwest. This widespread demand has contributed to this run-up in prices.”

According to a joint report by Brown Harris Stevens and Halstead Group, the median sale price for all Manhattan apartments was $960,000, up 10 percent from the fourth quarter of 2013. The average price reached a record $1.73 million, the brokerages said.

For all Manhattan apartments, the absorption rate, or the time it would take to sell all the existing inventory at the current pace of deals, was 3.9 months in December, according to Brown Harris Stevens. A rate of six to nine months is considered a “balanced” market, the brokerage said.