New development shouldered a decent share of the blame for the slowdown in residential activity during the first quarter of 2015.
A market, which draws a bulk of its strength from dwindling supply, unsurprisingly saw tempered demand follow an improving pool of options for home-seekers.
According to CityRealty’s recent New Development Report, the price gap between new condos and the broader market continues to widen.
The report showed the median asking price for a new condo in 2014 was $2,539,113.50, compared to $1,476,463 for the entire condo market.
However, the result is merely the expected ripple in the natural order of supply and demand.
Calling the market “pregnant,” CityRealty’s director of research, Gabby Warshawer told Brokers Weekly that the current rising prices will only temporarily be coupled with the incoming increase of supply.
“We are going to see a spike in (price) affecting the overall condo market,” said Warshawer. “The prices of new development are always higher on average.”
The prices are so elevated, that ultra-luxury sales are having an incredible impact on the overall state of the market. Five buildings are set to register more than $10 billion in sales between them.
Alone, they will account for about one-third of the projected $27.6- $33.6 billion in aggregate new development sales over the next five years.
But the higher prices and the bounty of options exists — in some aspects — on paper alone.
Warshawer said that “quite a lot” of the currently unclaimed new homes are expected to be closed upon before the start of 2016.
In order to return to homeostasis that swiftly, new development sales volume may need to move a bit quicker than it has in recent months. Sales volume for new homes is far below its 2008 peak.
Despite the increase in new development and record-high prices, the projected 1,200 closings in 2015 is just one-fifth of the sales volume seen at the peak of the market in the mid-2000s.
Price-per-square-foot at new homes jumped 50 percent between 2013 and 2015 alone.
The median sale price of a new condo in Manhattan is expected to hit $3,350,000 next year, which breaks down to a median price per square foot of $2,157.72, according to the CityRealty.
The average price of a new apartment is expected to be $5.9 million in 2015, more than double the citywide average, which will hit $2.7 million in 2015.
In 2017, the median sale price of a new condo is forecast to be $3,625,000.
The climb will reach a plateau, according to Warshawer, but probably not until closer to 2017 when the inventory has had a chance to cycle out of availability.