Manhattan Apartment Sales Gain as Economy Fuels 'Bipolar' Marketby
Manhattan apartment sales jumped in the third quarter, buoyed by deals at the high and low ends of the market, as foreign investors drove demand for condos and entry-level buyers took advantage of record-low mortgage rates.
Purchases of condos and co-ops rose 17 percent from a year earlier to 3,106, New York appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said in a report today. That was the highest volume since the third quarter of 2007. The median sales price was $911,333, little changed from $914,000 in the same period of 2010.
New York real estate demand is holding up as a broader economic slowdown provides an opportunity to enter the market. Buyers from China, Korea, South America and Europe fueled a 33 percent increase in condo transactions in the quarter, said Jonathan Miller, president of Miller Samuel. Studios and one- bedroom units accounted for more than half of all deals, a sign of demand from first-time purchasers, he said.
“You have strength at the low end and the upper end,” Miller said in a telephone interview. “They’re benefitting from what’s going on globally: low interest rates and the weak dollar. The middle is restrained largely because of elevated unemployment and tight underwriting.”
The U.S. dollar declined against all of the world’s 16 most-traded currencies in the 12 months through August before rallying last month. The average rate for a 30-year fixed mortgage fell to 4.01 percent last week, the lowest in Freddie Mac records dating to 1971, after the Federal Reserve announced a debt-buying plan aimed at lowering borrowing costs and bolstering the economy.
Buyers see New York real estate as a safe investment, Miller said. The Standard & Poor’s 500 Index tumbled 14 percent last quarter, the worst performance since the end of 2008, as concern increased that Europe”s debt crisis will trigger a global recession and the Fed said there are “significant downside risks” to the U.S. economy.
Condo transactions, which foreign buyers tend to favor, rose to 1,789 units from 1,341 a year earlier. Sales of co-ops were little changed at 1,317 from 1,320 a year earlier.
Four other reports today also showed rising apartment sales and lower prices. The Corcoran Group said purchases of condos and co-ops climbed 15 percent from a year earlier to 3,750. The median price declined 2 percent to $855,000.
Brokerage Brown Harris Stevens and its sister firm, Halstead Property LLC, reported sales rose 1 percent, while the median price fell 4 percent to about $850,000. StreetEasy.com, a service that compiles broker listings, said closings jumped 9.9 percent and the median price decreased 0.5 percent to $843,375.
“The market is bipolar,” Sofia Song, vice president of research for StreetEasy, said in a telephone interview. “You have the luxury market driven by foreign demand, with foreigners finding Manhattan to be a relative bargain. On the other hand, you have entry-level demand with domestic buyers trying to take advantage of the record-low interest rates.”
Sales of studio and one-bedroom apartments rose 9 percent from a year earlier to 1,203, according to an analysis by Gregory Heym, chief economist for Brown Harris Stevens. Heym said last year’s transactions at this level were depressed by the expiration of a federal tax credit of as much as $8,000 for first-time buyers that required contracts be signed by April 30.
Jonathan Krangel, 25, had been on the fence about buying before closing on his first apartment at the end of August, with his father co-signing on the deal. The East Village one-bedroom, one-and-a-half-bathroom condo that he bought for $859,000 was a “tremendous value” that he couldn’t pass up, he said.
New York Story
“I’m a firm believer in the New York story,” Krangel said. “People still go out of their way to move to New York to try to make a life for themselves. You wouldn’t say the same thing about the Las Vegases or southern Floridas of the world.”
Manhattan properties stayed on the market an average of 119 days, down from 125 a year earlier, according to Miller Samuel and Prudential.
Sales of luxury units, defined as the top 10 percent of all deals by price, increased 17 percent from a year earlier to 311, the companies said. The median price for a luxury apartment fell 5 percent to $4.17 million.
On the Upper East Side, the median price of co-op resales dropped 2 percent from a year earlier to $885,000, according to Corcoran. Median condo prices in the neighborhood fell 3 percent to $1.1 million. On the Upper West Side, the median price of previously owned co-ops slid 9 percent to $759,000, and condo prices fell 4 percent to 1.06 million. For downtown Manhattan, south of 34th Street, median prices for co-ops rose 11 percent to $720,000, while condo prices fell 3 percent to $1.38 million.
“It’s unusual when you have high demand and low inventory that prices remain flat and not rise,” Corcoran Chief Executive Officer Pamela Liebman said in a phone interview. “The macroeconomics of the city, state, country and the world will likely prevent that from happening. People are not willing to overpay.”