Manhattan Apartment Prices Could Rise as Sales Grow and Inventory Shrinks
MANHATTAN — While apartment prices in Manhattan have remained relatively stable for the past three years, prices could creep upwards as the number of available apartments continues to shrink, experts say.
The number of apartment closings in the borough jumped nearly 17 percent over the past year, according to a report from Streeteasy.com, while another report from Brown Harris Stevens found that the number of closings in Manhattan — 2,790 — was at the highest level since Lehman Brother’s collapse four years ago.
“There’s strong demand, limited supply, record rents and low interest rates. Put it all together, we’ve seen an increase in sales,” said Greg Heym, chief economist of Brown Harris Stevens.
Manhattan’s housing inventory fell 24.3 percent from last year, marking its lowest level in more than 7 years, according to real estate expert Jonathan Miller, author of Prudential Douglas Elliman’s report.
Falling inventory remained a “chronic problem,” Miller said. “If that continues, you’ll see appreciation in prices — not boom," he added.
Miller said that brokers had a busy summer with pending sales jumping 4.9 percent ahead of last summer. The Elliman report found a slight dip in sales in the past year.
Sales for studios and one-bedrooms remained brisk, with a median price of $400,000 for a studio, the report found.
The median sales price for co-ops, condos and apartments of all sizes was $850,000, the Elliman report found.
Sales of mid-market apartments that buyers typically sell to “trade up” — or two bedrooms — remained sluggish.
“There’s weakness in the middle,” Miller said, blaming “irrationally tight” credit, he said.
He said for example, that a couple who purchased a unit in 2004 with 10 percent down could now be looking at a more expensive home requiring 20 percent down — which could drive them to stay put.
He also blamed some hesitancy in the market on the uncertainty of the national and world economies, he said.
“We’re in an election year. There’s no cohesive agreed-upon national economic policy as it relates to housing,” he said, Plus, with interest rates set to remain low for another couple of years, at least, homeowners no longer feel “the sense of urgency.”
The luxury market — apartments costing roughly $3 million or more — dipped 2.6 percent to a median sales price of $4.07 million over the past year, according to the Elliman report.
The Brown Harris Stevens report also found the luxury market slipped a bit, with sales of units worth more than $5 million falling 12 percent from last year.
But Heym didn’t think it was a trend, saying he believes people at the high end of the market are waiting to see what the next era of political leadership will bring for capital gains taxes and the expiration of the Bush-era tax cuts.
“Expect to see a pick-up in high end closings” when that's resolved, Heym predicted.