Spurred on by the familiar driver that is a dearth of supply, Manhattan’s residential market is still sustaining significant price points.
According to Halstead Property’s Second Quarter 2015 market summary, an apartment in the borough currently costs in excess of $1.8M on average. Though this is a subtle descent from the first quarter’s record level, it still sits eight percent higher than the middle ground of June 2014.
The median price, which is 6 percent higher than last year’s second quarter, is $955,000.
Co-Ops, not surprisingly, bring the overall numbers down with condos commanding significantly more when standing on their own.
Becoming the proud owner of a Manhattan condo will run you just under $2.5M on average, a $1.2M climb from co-ops alone and about $700K more than the general apartment category which sits at just over $1.8M.
“Our fundamentals have not changed and it remains a seller’s market,” chief executive office of Halstead Property, Diane M. Ramirez said. “Our sellers are not budging and continue to ask high prices, which results in fewer sales. Despite the slight decline, New York persists as a strong marketplace.”
Those sellers- who are receiving 99 percent of their final asking price-have little reasons to move, as co-founder of Millhouse Peck, Eric Gray told Real Estate Weekly, there is plenty of “pent up demand” that is yet to be met.
“Ín some neighborhoods you’re going to see a lot of supply coming online,” Gray said, before saying that he does not expect the increased amount of available properties to be enough to stem the tide.
“You’re not getting a bargain in the boroughs anymore unless you’re willing to go further and further out,” he continued. “And even then you’re not getting the bargains that there used to be.”
“It’s become much more acceptable and chic for people to live in Brooklyn now,” said Jason Halpern, founding partner of JMH Development, harmonizing with Gray’s commentary on the rising tertiary prices.
“Demand is the one constant,” said Gray, who singled out the Upper West Side as an area that should see residential prices continue to hit one of the steeper inclines in the city due to the recent historic designations. “You talk about a supply constrained market, the ability to develop on the Upper West Side is going to become more difficult.”
“The issue facing buyers is too little inventory,” said Frederick Warburg Peters, president of Warburg Realty via his 2015 Second Quarter market analysis. Peters says that though properties exceeding the $25M threshold are outnumbering potential buyers, the large stock beneath that benchmark is giving sellers an incredible amount of control.
“Although the market experienced an uptick in inventory as the spring began, anything in good condition with a reasonable price was snapped up immediately. Week-end open house attendance remains at record levels, and multiple offers during the first week on the market drive some prices well above ask, especially in the $2 million and under price range,” said Peters.
Despite the obvious advantage given to those looking to deal properties that are in short supply, Peters pointed out one way in which certain buyers are regaining some control in the marketplace.
“One phenomenon which is new to me, but which we have seen numerous times in recent months, shows the buyer bidding aggressively to secure a property he is not even certain he wants to buy. Once his offer has been accepted, then he will weigh the options and decide whether to go forward or not, having won himself a little time to think. As a result, many times the buyer who is second in line will be the one to end up with the property.”
“Even if the winning bidder explicitly states that, after thinking it over, he feels he has offered too much, the seller now has that high number in his or her head,” continued Peters. “Even though that buyer was not real, he can become the price benchmark by which all subsequent comers are judged. Such unrealistic expectations can delay the process by which a real, but realistic, buyer for the property can be brought to contract.”
The delay does more than slow down the seller looking to move on. The now inflated pricing strategy may pump the brakes on the process, but if another buyer decides to pick up where the initial bidder left off, the seller eventually benefits financially.
It may be harder than ever to add new product in certain areas like the Upper West, as Gray said, but those untouched parcels that do hit the market are currently averaging closing prices of more than $3.2M. This is a 5 percent jump from the beginning of the year but a small drop from the early summer of 2014.
Resale transactions are more than doing their part, hitting record levels during the second quarter of this year. The average resale price, hit just under $1.6M, which is seven percent steeper than this time last year. The median resale price of apartments climbed by six percent over the past 12 months and sits at over $920,000.
Resales took about 90 days to leave the marketplace in the second quarter, which is a longer stay than this time in 2014.
Closings did drop by 10 percent in the second segment of 2015 when compared to last year’s second quarter, with just over 2,400 deals being finalized.