Real Estate

New Manhattan condos break price records, for now

The numbers are soaring higher than the buildings themselves. Brand new luxury Manhattan condos sold for a median price of $2.7 million in the second quarter of this year, a new record, according to Douglas Elliman in its quarterly report.

That is a 44 percent jump from one year ago. The numbers, however, do not reflect the market today.

"Most of this is being caused by the new development phenomenon of properties closing that went to contract a year ago. That's been happening since the third quarter of last year," said Jonathan Miller, CEO of Miller Samuel, who compiles the report.

The high end of the Manhattan market today is actually weaker than it has been in years. That is largely due to so much new luxury supply, as cranes continue to cross the skyline.

"The housing market has generally been soft at the top and tight at the bottom and then a modest-paced market in the middle," said Miller.

The 90 story luxury tower One57, center, on West 57th Street in New York.
Richard Levine | Corbis | Getty Images

In the re-sale market, which makes up 80 percent of Manhattan, sales and inventory have finally returned to long term norms. Inventory was chronically low for several years and bottomed out in 2013, to the lowest level on record; it has risen nominally since, but in the last couple of quarters has really ramped up. Re-sale inventory in the second quarter was 25 percent higher, the biggest annual jump in seven years. Sales volume had been at historic highs, but is now right around its average of the last decade. The median price of a re-sale: Flat.

"The market is heading sideways, and it hasn't done that in a while," said Miller.

The result is far fewer bidding wars, in fact the lowest level in three years. Just 16 percent of transactions were the result of bidding wars, down from 31 percent in the third quarter of last year.

"While much of the media focusses on high-end, new development sales, it is important to remember that a vast majority of the Manhattan housing stock are resale apartments. This quarter there were 1600 resale closings and of those sales only smaller apartments experienced price increases," said Hall F. Willkie, president of Brown Harris Stevens Residential Sales in its quarterly market report.

New development in Manhattan has become highly bifurcated. North of $5 million (the top 8 percent) the market is very quiet. The bottom half, as you move down in price, that market is seeing pretty regular activity, according to Miller.

As for Brexit making any kind of impact on Manhattan real estate, the opinions are as varied as the assortment of bagels on the Upper West Side. It may be a positive for the financial sectors in Manhattan but could curtail some international real estate buying as the dollar strengthens against other currencies. Mortgage rates will stay lower longer, but buyers on the high end mostly use cash.