Manhattan apartment prices climbed in the first quarter as buyers competed for properties amid the biggest inventory decline in more than a decade.
The median price of all co-ops and condominiums that changed hands in the three months through March 31 rose 5.9% from a year earlier to $820,555, appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate said in a report today. Purchases rose 6.3% to 2,457, even as the number of properties on the market plunged 34%, the most in more than 12 years of record keeping.
“The defining characteristic of the housing market is a lack of supply, and that’s why we’re seeing upward pressure on prices,” Jonathan Miller, president of New York-based Miller Samuel, said in an interview.
Prospective buyers, spurred by record-low interest rates and apartment rents that are poised to surpass their 2006 peak, are finding little to choose from. Owners are in no rush to list their homes in a market where prices have remained relatively flat for three years, according to Miller. Those who bought during Manhattan’s market peak and saw their values drop in the slump may not have built up enough equity to sell, he said. The supply of newly constructed units is also thin, after builders halted projects following the credit crisis.
In the first quarter, 17% of all deals were at or higher than the asking price, Miller said.
Other reports issued today on the Manhattan sales market showed a decrease in the median price because of a decline in super-luxury sales, following a frenzy to offload property in the fourth quarter before an expected capital-gains tax increase this year. Sales for more than $10 million declined 47% to just nine deals, said Gregory Heym, chief economist at Terra Holdings LLC, owner of brokerage Brown Harris Stevens.
“It’s a hangover from the fourth quarter, with the tax law changes that were coming,” he said. “It’s a mistake to look at this and assume that prices are declining or stagnant, because that’s not what’s going on in the market right now.”
StreetEasy.com, a property-listings website, reported a 27% jump in the number of listings where sellers increased their initial asking price. Buyers signed more than 3,000 purchase contracts in the first three months of the year, the highest of any first quarter since 2008, when StreetEasy began tracking the data, said Sofia Song, vice president of research.
This “is the year of the frustrated buyer,” Song said. “You have all this pent-up demand, people who have been holding back, watching the market, watching our site, ready to pounce.”
A separate report from the Corcoran Group said inventory slid 26% in the first quarter from a year earlier to 6,225 homes. It was the eighth straight year-over-year decline.
On the Upper West side, the median price of condo resales climbed 20% to $1.26 million, while co-op resale prices rose 4% to $730,000, Corcoran said.
Prices declined on the Upper East Side, with the median for previously owned condos falling 3% from a year earlier to $975,000, Corcoran said. Co-op prices dropped 17% to $726,000, as lower-priced studios and one-bedrooms made up more than half of all sales, according to Corcoran.
“Since the East Side is home to so many luxury co-ops, it saw a significant effect from the decline in high-end sales in the first quarter,” Brown Harris said in its report.
Listings for luxury apartments, the top 10% of all sales by price, didn’t decline as sharply as the broader market as owners were inspired to try their luck after record prices paid for co-ops and condos in 2012, Miller said. Luxury listings fell 15% to 1,025, Miller Samuel and Douglas Elliman said, while the median price of completed deals fell 2.7% to $4.02 million.
In new developments, the inventory of apartments fell 42% in the first quarter from a year earlier, Miller Samuel and Douglas Elliman said. The median sale price climbed 36% to $1.33 million.
