Average Manhattan home hits record $1.6 million

The average apartment price in Manhattan hits a record of $1.6 million.

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NEW YORK (CNNMoney.com) -- Manhattan apartment prices hit fresh record highs in the first quarter of 2008, even as the rest of the country was reeling from the mortgage meltdown.

Four of the city's top real estate agencies released their figures for the first quarter of 2008 today. The reports indicate that strong sales in the city's booming luxury segment have been the market's main driver, but that overall sales are slowing.

Demand is high and supplies are tight for multi-million dollar luxury apartments in Manhattan, according to James Gricar, Executive VP, Director of Sales for Brown Harris Stevens. "A couple of transactions can really impact the average," he says.

The average price of a New York City apartment ranged from $1.63 million to $1.72 million in the first quarter of 2008, according to separate reports released Wednesday by Brown Harris Stevens, the Corcoran Group, Halstead Property and Prudential Douglas Elliman. That represents an increase of anywhere between 19% and 47% over average apartment prices for the first quarter of 2007.

If two of the most elite addresses with units on the market are excluded -- 15 Central Park West and The Plaza, the average prices comes down to $1.42 million.

The median price of a home in Manhattan - representing the midpoint of the market - rose to between $855,000 and $945,276, depending on the report. That's up 13% over the first quarter of 2007.

The median apartment price is rising significantly, despite mixed sales numbers, because "you have had a disproportionate sale of high end properties," says Jonathan Miller, President and CEO of Miller Samuel Real Estate Appraisers. Miller Samuel compiled data for all of Manhattan on behalf of Prudential Douglas Elliman.

"The price per room and the average price per square foot in 2 bedroom apartments is stable or slightly decreasing, while in 3 bedrooms is slightly increasing," Gricar said.

While Manhattan real estate generally bucks national real estate trends, even this rock-solid market is feeling the crunch. The number of sales in the first quarter of 2008 declined 34.3% from the first quarter of 2007, according to Miller Samuel Appraisers.

That drop is the largest that the firm has ever reported since it started measuring sales in 1989. This percentage dip is large not only because buyers are nervous in 2008, but also because 2007 was a record high year for New York City sales.

Even buyers who have more than enough money to purchase property in Manhattan are getting cold feet. "I am still struck by the sheer numbers of people who are ready to buy, but who are waiting to see what will happen," Miller says.

However, not everyone agrees that Manhattan is seeing a major sales slowdown.

"Buyers don't have the same sense of urgency -- they are more cautious, taking longer to make their decisions," says Corcoran Group CEO Pamela Liebman. Still, she says Corcoran had a strong quarter with a 5% sales increase.

But Brown Harris Stevens reported a 1% decrease in the number of closed sales in this quarter from a year ago. Gricar says that Brown Harris Stevens first quarter sales dip was smaller than what was reflected in the Miller Samuel report because Brown Harris works in the luxury market, where the sales levels tend to be more stable.

With the dollar hitting all time lows, there has been an increase in interest from foreign buyers which is also helping to buoy the New York City market, especially on the high end.

Liebman says Corcoran is seeing a lot of foreign buyers from London, Italy, and Korea. Foreign buyers are especially interested in name-brand addresses, like the Plaza and in buildings by famous architects -- or "starchitects," says Liebman.