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Manhattan apartments smash through the $1M barrier

For the first time in history, the median price of a Manhattan apartment has topped $1.2 million.

In the fourth quarter of 2015, prices reached an all-time record, according to residential brokerage firm, Compass.

The number reflects a 17 percent increase over the 2015 third quarter median price of $1 million, and a 31 percent increase from the median price of $970,000 just one year ago.

The report pointed out that the median price is 59 percent higher than at the bottom of the recession, when the median sales price was around $800,000 in the fourth quarter of 2009.

The increase is attributed to the high number of new development closings, many of which went into contract over the past two years.

Corcoran’s fourth quarter report showed the median sales price at a slightly lower number – $1.1 million, a ten-year high.
The brokerage firm’s report noted that all bedroom sizes had increases in median prices, with three bedrooms and up presenting the highest annual increases, with 24 percent, with a median of $3.88 million. One bedroom units had the second largest increase, up 11 percent to $810,000.

Halstead Property Development Marketing found in its 2015 year-end new development report, that new development absorption increased significantly in 2015 – with an average of 201 units sold per month in Manhattan and an average of 51 units sold per month in Brooklyn.

Average price per square foot increased 2.4 percent in Manhattan and 18.2 percent in Brooklyn – a clear indicator that the trend of buyers going to Brooklyn shows no signs of stopping.

One of the biggest takeaways from the report was the growing market in Brooklyn. In 2015, the new development market in Brooklyn was 25 percent the size of the Manhattan new development market by transaction volume, a sharp increase from 10.5 percent in 2014. And new development deal volume increased a whopping 169 percent in Brooklyn in 2015, with over 600 units entering contract or closing, up from 223 units in 2014.

Pierhouse at Brooklyn Bridge Park
Pierhouse at Brooklyn Bridge Park

The report also found that 49.2 percent of all active new development listings in Manhattan are price over $5 million, down from 52 percent in 2014. The volume of contracts signed and closed deals in Manhattan in the $1 million to $4 million price range rose 17 percent to 1,318 units, up from 1,128 units in 2014.

With the exception of the stretch of 57th Street known as “Billionaire’s Row,” Midtown East saw the biggest year-over-year increase in average price per square foot in Manhattan with $2,152 p/s/f, at nearly 19 percent for signed contracts. The Upper West Side followed with a 13.3 percent increase year-over-year to $2,012 p/s/f.

“I think the fact that we absorbed as many units as we did in the second half of the year when people started talking about a slowdown was a bit surprising,” said Steve Kliegerman, president of Halstead Property Development Marketing. “I think the slowdown was related to specific types of properties, $25 million and up.”

STEPHEN KLIEGERMAN
STEPHEN KLIEGERMAN

Brooklyn’s powerful market share among new development sales is one of the biggest stories of 2015 – and maybe even the decade.

“I think Brooklyn is the story, potentially of the decade, in real estate,” said Kliegerman. “The demand for property in Brooklyn the last couple years has been incredibly high. The pace of appreciation in the condo market has been incredibly well-received.

Back in the market, between 2007 and 2011, Brooklyn was truly a value play, and a lot of the product was not as sophisticated, but it’s at a higher level now.”

Though Manhattan has always commanded the highest real estate prices compared to the other four boroughs, Kliegerman sees a long road of opportunity for Brooklyn.

“The good news is Brooklyn is a very big borough, and has a lot more opportunity for continued growth,” he said, mentioning Downtown Brooklyn, Bushwick, and even Sheepshead Bay and Coney Island as areas increasingly drawing investors and buyers.

“I think Brooklyn has a lot of opportunity – probably more than Manhattan.”

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