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Manhattan Average Home Price Crosses $2M Mark for First Time

By Amy Zimmer | April 1, 2016 7:24am
 An image of a penthouse at 293 Lafayette St., a condo conversion of the upper floors of the Puck building, where penthouses are currently listed by Corcoran for $19.95 million and $58.5 million.
An image of a penthouse at 293 Lafayette St., a condo conversion of the upper floors of the Puck building, where penthouses are currently listed by Corcoran for $19.95 million and $58.5 million.
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MANHATTAN — Manhattan’s average home sales price crossed the $2 million mark for the first time, according to real estate market reports released Friday looking at sales data from the first quarter of 2016.

The average sales price hit a record $2.05 million — up more than 18 percent from the same period the year before — driven by an uptick in closings in pricey new developments, according to the analysis from Douglas Elliman.

The volume of closings in new developments — where prices averaged $3.9 million — nearly doubled from a year ago as contracts signed previously, perhaps even more than a year ago, finally closed upon completion of construction.

This increase in closings for uber-luxury apartments will likely continue for another year or two, said Elliman report author Jonathan Miller, which means records could continue to be set in the coming years.

But Miller noted the super high-end of the market of units priced above $5 million only represented about 2 percent of the overall market and was “not a proxy for the rest of the market.”

While there’s been much talk about sluggish sales for the city’s priciest properties, there are still buyers shelling out big bucks, said Andrew Heiberger, founder and CEO of TOWN Residential.

His firm, for instance, recently worked on a deal for $28 million in Greenwich Village, which represented a drop from a previous firm's asking price of $50 million for each of those properties.

The “price correction” reflected the reality in the face of the supply and demand for this segment: there are currently more than 150 listings priced at or above $20 million, Heiberger said.

“As sellers are adjusting expectations, buyers are writing checks,” he said. “[Developers] wanted to get ahead of the market” — when prices were rising so rapidly — “and they would overprice by $10- to $20 million.”

When the $28 million Village apartment closes, it will still be a record for East of Fifth Avenue, noted Heiberger, who didn’t disclose the exact address since the unit was still in contract.

Some developers, however, are reluctant to lower prices and instead have been offering incentives to brokers, like $5,000 American Express cards, or other deals made behind closed doors, like offering to pay a buyer’s lawyers fees or for construction work they want to make changes to their new digs, said Frederick Peters, president of Warburg Realty.

“There are a number of ways you can adjust the price without adjusting the price,” said Peters, who believes these offers will only increase over the next year.

On the lower end of the market, especially for studios and one bedrooms, which are the least expensive types of apartments, competition remains fierce. 

These smaller units were on the market for a shorter amount of time than the same sized units for sale during this quarter last year. For instance, the average number of “days on market” for studios was 22 percent shorter than the year before, dropping to 83 days; one-bedrooms saw a 19 percent drop to 76 days, according to Corcoran's first quarter report.

Generally, when an apartment under $2 million is priced “right,” open houses are still drawing 50 to 100 visitors even though the market’s pace is slower than a year ago, Peters said.

Buyers in search of space are pushing deeper into Brooklyn, he added, looking at Ditmas Park, which Peters called “stunningly pretty, like a tiny suburb in the middle of New York” and Prospect-Lefferts Gardens, “with its blocks of landmarked Victorian and Edwardian limestone houses.”

Others are looking at the luxury condos in Long Island City or finding value on the Upper East Side.

“A co-op in need of renovation east of Third Avenue on Manhattan’s Upper East Side offers more bang for the buck than a similarly sized condo in the East Village, on the Lower East Side, or in most neighborhoods in brownstone Brooklyn,” Peters wrote in his quarterly report.

And there’s always the suburbs, said Dottie Herman, CEO of Douglas Elliman.

“You’re seeing parts of Connecticut, Westchester and Long Island really start to pick up,” Herman said. “Obviously for $2 million there, you can get a mansion.”

The volume of sales in Westchester in the second half of last year was the highest it had been in 34 years, Miller noted. Long Island and Fairfield, Conn., saw their highest number of sales in more than a decade.