MANHATTAN — The average apartment price dipped below $2 million for the first time in nearly two years, according to a real estate report released Tuesday looking at Manhattan sales in the third quarter.
The average price of $1.96 million was 4 percent lower than a year ago, the Halstead Property report found.
This does not mean, however, that Manhattan’s market is in any kind of free fall.
The dip was likely due to fewer “legacy” closings at luxury new developments — units that had contracts signed in the more frenzied days from 2013 through 2015, which propped up prices during the past several quarters, experts said.
“While the average Manhattan apartment price fell from a year ago, this was due to fewer luxury new development closings in buildings such as 432 Park, which had helped inflate prices,” Halstead CEO Diane Ramirez said.
While the average price of new development fell 24 percent over the past 12 months due to a 42 percent decline in closings over $10 million — bringing the average price for new developments to about $3.38 million — re-sales saw average prices increase 6 percent to $1.62 million.
Plus, the newer crop of new development tends to be priced less than the projects that began popping up in the first wave a few years ago, noted Jonathan Miller, who authored Douglas Elliman’s third quarter report.
“The ‘legacy’ pipeline is running dry,” he said. “The second wave of new development is not priced like the first wave.”
For re-sales — which represents about 85 percent of the market — prices saw modest growth, overall, with an increase of nearly 2 percent to a record $995,000, according to the Elliman report, with some types of units seeing declines and others seeing growth.
Co-op prices, for instance, hit a record high since Miller started keeping track of the data 28 years ago.
The median price — meaning the midpoint of the market — for Manhattan co-ops hit $850,000, up more than 8 percent from the previous year and a record high since Miller began keeping track 28 years ago.
Generally, it is getting harder to find modestly priced “entry level” apartments in Manhattan.
Things were tight in the bottom 10 percent of the market, where the average price of $364,095 was up 6.5 percent over the past year and hit a high since 2010, Miller said.
The upper threshold for this bottom tier of roughly 336 apartments — which, for instance, included lower-priced co-ops in Northern Manhattan — was $466,000.
That was light years away from the lower threshold for the top 10 percent, which was $4.24 million, according to the Elliman report.
The experts from Stribling believe it will be harder in the future to find many apartments priced below $500,000.
For the first time, closings under $500,000 and over $5 million had an equal share of the market at 10 percent, its report noted.
“These high-priced deals, fueled almost entirely by new development, are expected to increase market share in the near-term.” Garrett Derderian, director of data and reporting at Stribling said.
Meanwhile, there were more units on the market priced above $10 million, he noted, than below $500,000, which were almost exclusively co-op resales.
“From a developer prospective, it is financially unworkable to bring a unit to market under $500,000,” he said, noting that rising labor and land costs in Manhattan make it impossible to build new units in the lower-priced tiers. “This is true even for Upper Manhattan, which remains the most affordable submarket.”
Northern Manhattan, however, is still ascending the ladder of popularity, along with Queens and The Bronx, according Warburg Realty’s Frederick Peters.
“In Manhattan, Inwood and Washington Heights are more popular than ever with young professionals, even as prices there have doubled since 2010,” he wrote in his quarterly report.
“Queens is experiencing a renaissance of formerly Manhattan-centric buyers who love its easy subway access to Midtown and its multi-ethnic neighborhoods filled with great food and vibrant street life,” he continued. “And gentrification is definitely coming to parts of The Bronx. Areas like the Grand Concourse, middle class in the 1940s and 1950s, became submerged in urban blight during the subsequent decades but are now re-emerging.”