New York home prices: No place but up
Prices are higher than ever in Manhattan, while inventories and time-on-market are down. You got a problem with that?
NEW YORK (CNNMoney.com) -- If there's one place where the housing slump seems to be a figment of the imagination, it's New York City. A home in Manhattan is more expensive than ever, according to the latest reports from several big New York real estate brokers.
The median Manhattan condo or co-op apartment sold for between $840,000 and $895,000 during the three months ended June 30. The low estimate was reported by two brokers, Halstead Property and Brown Harris Stevens, while the Corcoran Group pegged it at $875,000, and Prudential Douglas Elliman recorded the high figure among the group.
The average (mean) prices from all four companies more or less agreed - around $1.3 million. The disparity between mean and median prices points out the strength of the city's luxury market. Four-bedroom apartments averaged nearly $10 million during the quarter, according to figures from Prudential Douglas Elliman.
What keeps New York real estate afloat even as many other markets are sinking?
According to Pam Liebman, Chief Executive of Corcoran Group, three kinds of buyers are helping fuel the increase in home appreciation.
"You can't underestimate the impact of Wall Street," she said. With hedge fund managers and investment bankers awash in cash, posh apartments close to work are in great demand.
The second group comes from overseas. "New York is a bargain for many foreign buyers," said Liebman. Wealthy Koreans, Irish and Russians are some of the newer nationals from high cost foreign countries are drawn to the business centers and cultural attractions of the city. Many are spending millions for second, third, even fourth homes.
Also adding to demand, according to to Liebman, are the parents of young college students and graduates. Instead of paying stiff New York rents, they figure they can buy an apartment, keep junior there for four years and then sell at a profit when - or better if - he moves out.
The strong market has resulted in a building and conversion boom as new apartment buildings continue to hit the market and their apartments are snapped up by eager buyers.
Jonathan Miller, of Miller Samuel, the appraisal company that compiles the data for Elliman, said what most amazes him is, "You're walking around the city and seeing all these new buildings, yet inventory still dropped."
Substantially. Listing inventory fell 31.5 percent to 5,237 units compared with a year ago, according to Miller, and apartments are staying on the market a shorter period of time - 117 days on average, 10.1 percent less than a year ago.
Co-op apartment inventory dropped more than 40 percent and condo inventory 22 percent. Miller explained that more than 96 percent of new product is condo, enough to offset half the inventory drop but not enough to match demand rise. The Spring quarter is also usually marked by flat or rising inventory, making this decline even more impressive.
"The number of sales is the highest ever for a quarter," said Miller.
If the numbers betray any weakness at all, it would be in the co-op segment; Brown Harris Stevens figures show a drop of 10 percent compared with a year ago.
"So many closings of co-ops were in small apartments, however," said Hall Wilkie, president of Brown Harris Stevens. The average co-op sold was 8 percent smaller than last year, accounting for much of the difference.
David Von Spreckelson, a vice president for Toll Brothers, the upscale home builder, who works out of New York, said his company is firmly committed to new development in the city as its business in many other housing markets has flattened.
Sales of its latest project, a 76-unit condo building near Union Square with one-to-three bedrooms ranging from $850,000 to $2.4 million, "exceeded our expectations."
None of the brokers seem to be much concerned that the Manhattan merry-go-round was about to stop. Wilkie pointed out that many of the most expensive buildings in development - the reconverted Plaza, the Stanhope on Fifth Avenue and 15 Central Park West - have sold apartments at very high prices that won't be closed on - and so go uncounted in the latest statistics - until later this year.
And little seems to reduce demand. Many once-depressed or unfashionable neighborhoods - Harlem, the Lower East Side, the East Village - have opened up new frontiers for middle and high-income buyers, yet demand has not slackened.
And if you don't like the idea of living cheek-to-jowl with neighbors in some giant apartment building, you can opt for a nice single-family house. But in New York doing that's like buying a yacht - if you have to ask how much it costs, you can't afford it.