Manhattan Home Prices Climb in Busiest Spring Since 2007

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Citizens walk past a residential building in New York

Manhattan apartment prices climbed in the second quarter as buyers competed for a tight supply of properties in the busiest spring selling season since 2007.

The median price of all co-ops and condominiums that changed hands in the three months through June rose 4.3 percent from a year earlier to $865,000, appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate said in a report today. Purchases climbed 19 percent to 3,144, the most for a second quarter in six years, as buyers snapped up apartments faster than new units became available. The number of properties for sale plunged 31 percent to 4,795, the second lowest in more than 12 years of record keeping.

“There’s a chronic lack of supply -- no meat left on the bone,”Jonathan Miller, president of New York-based Miller Samuel, said in an interview. “We’re expecting price appreciation for the foreseeable future until there’s a meaningful relief in inventory.”

Prospective buyers are competing for a shrinking pool of homes, spurred by rising apartment rents and the fear that they’ll miss out on historically low mortgage rates. Owners who bought during the boom are waiting to list their properties until their equity climbs high enough to justify a sale, Miller said. The supply of newly constructed units is also thin, after builders halted projects following the credit crisis.

In the second quarter, 36 percent of all deals were at or higher than the asking price, compared with 17 percent a year earlier, Miller said.

‘Very Emboldened’

Residential Buildings in Manhattan

“Sellers are feeling very emboldened because they know inventory is about 30 percent lower than last year,” said Gregory Heym, chief economist at Terra Holdings LLC. The company owns brokerages Brown Harris Stevens and Halstead Property, which also released a report on Manhattan home sales today.

Properties spent an average of 102 days on the market in the second quarter, down 18 percent from a year earlier, according to Brown Harris Stevens and Halstead.

“You’re in a seller’s market,” Heym said in an interview.

Gaspar Ferrara didn’t intend to sell the two-bedroom condo in the West Village that he bought in 2010 as a weekend retreat. After realizing that he and his wife, who live in rural New Jersey, hadn’t used the Bleecker (BLEE) Street duplex as much as they planned, he asked his broker,Dominic Paolillo of Brown Harris Stevens, for help renting it out.

Opportune Time

Paolillo, who persuaded Ferrara to buy the 870-square-foot (80-square-meter) apartment for $1.58 million three years ago, suggested it might be an opportune time to sell it. Ferrara agreed to let him try.

“I said, ‘You know what? Let’s wing it. Put it up there for sale at $2.5 million,’” said Ferrara, chief executive officer of family outerwear business Amerimade Coat Inc. “I just picked a number out of my head.”

Within two days of listing it in March, Ferrara got two bids of more than $2 million, one of them in cash, he said. He asked the cash buyers -- a couple from Belgium seeking a place for a daughter who recently graduated college -- to meet his asking price of $2.5 million, and offered in exchange to remove the listing from the market immediately. They agreed, and completed the purchase in May.

Ferrara said he knew it was a good deal “because I’m still very happy I did it.”

StreetEasy, Corcoran

Other reports issued today on Manhattan home sales showed a scarcity of apartments and a frenzy of buyers eager to acquire them. StreetEasy.com reported 4,185 purchase contracts were signed in the quarter, up 22 percent from a year earlier and the highest for any quarter since the firm began tracking the data in 2007, said Sofia Song, vice president of research. The inventory of apartments on the market fell 11 percent, according to StreetEasy, a New York-based property listings website.

The Corcoran Group said inventory slid 25 percent in the second quarter from a year earlier to 5,971 homes. It was the ninth straight decline. The median price of all apartments that changed hands climbed 1 percent to $855,000, the brokerage said.

“Even though it’s a very robust market, it’s still a cautious market,” Pam Liebman, president of New York-based Corcoran Group, said in an interview. “Good properties, defined as well-priced in a nice building, are selling very quickly. But anything that’s overpriced or uninteresting will sit for a long time.”

Neighborhood Prices

On the Upper West Side, a shift toward deals for smaller apartments pushed the median price of condo resales to $1.26 million, down 5 percent from a year earlier, Corcoran said. Co-op resale prices fell 4 percent to a median of $747,000.

On the Upper East Side, the median sale price of previously owned condos climbed 5 percent to $1.15 million, the firm said. Co-op resale prices in the neighborhood fell 9 percent to $750,000. There were fewer than five co-op purchases for $10 million or more, compared with 13 such deals a year earlier, the brokerage said.

While the low supply will continue to push prices higher, an expected increase in mortgage rates over the next couple of quarters “takes some of the edge off the market,” Miller said. “That keeps us from getting into trouble in terms of runaway prices.”

The average rate for a 30-year (NMCMFUS) fixed mortgage rose to 4.46 percent, the highest level in almost two years, McLean, Virginia-based Freddie Mac said on June 27.

Listings for luxury apartments, the top 10 percent of all sales by price, didn't decline as sharply as the broader market as owners were inspired to try their luck after record prices paid for co-ops and condos in 2012, Miller said. Luxury listings fell 3.9 percent to 1,157, while the median price of completed deals climbed 3.1 percent to $4.2 million, Miller Samuel and Douglas Elliman said.

In new developments, the inventory of apartments fell 36 percent in the quarter from a year earlier, the firms said. The median sale price climbed 36 percent to $1.4 million.