Manhattan's Middle Market

Yesterday I discussed the high end of Manhattan's residential property market.  Here are a few current listings for somewhat more modest apartments.

Below is a wide-angle shot of a nice 1,000-square-foot, two-bedroom apartment in the established Sutton Place neighborhood.  The unit is priced at $1.6 million; with good credit and a 10 percent down payment, the monthly nut (taxes, mortgage, common fees) would be about $9,500.

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A 610-SF, one-bedroom apartment in this Chelsea building is for sale for $980,000.  (It was listed at $639,000 four years ago and sold for an undisclosed price -- Chelsea is hot now.)  With 10 percent down, total monthly charges are estimated at $5,500.

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This 364-SF studio in a snazzily renovated Wall Street building last sold for $399,000 in 2007 and now is listed for $625,000.  It comes with a tenant who is paying a monthly rent of $2,700.

2015 Stats

A New York real estate brokerage has released details on 2015 sales of condominiums and co-ops in Manhattan.  Some of the news:

     -- The average price of a Manhattan apartment was $1.94 million in the fourth quarter, up 10 percent from a year earlier.

     -- The median price was somewhat lower, $1.15 million, but up 18 percent from 2014.  (The reason for the difference is that a small number of very expensive apartments, selling for $10 million or more, distort the average price.)

     -- Demand was great; the average price paid was almost 99 percent of an apartment's listing price, and there were many reports of bidding wars for updated units in attractive areas.

     -- The average per-square-foot price rose above $1,800.  This implies a $1.8 million sales price for a 1,000-SF condo, which is pretty steep.

There is much more detail in this glossy report:

http://media.bhsusa.com/pdf/BHS4Q15_Market_Report.pdf


History

Manhattan always has been an expensive place to live, and prices used to be very volatile.  Here are some numbers from the years before and after the Great Depression.

                                      Mean Price                           Median Price

1920                                $42,500                                  $25,000

1929                                $75,700                                  $40,000

1939                                $30,300                                  $15,000


Those were different times, of course.

More recently, prices declined during the city's financial crisis in the 1970s and the Great Recession in late aughts.  Here is another brokerage's mapping of trends since 2003.  (The blue line is for new construction, the purple line for existing apartments; the bars indicate sales volume changes from year to year.)

One obvious conclusion is that developers are building new housing for the high end of the market, almost certainly a reflection of increasing land costs.

Real estate professionals, leery of softening world markets and recent stock price declines, are not so sure that Manhattan real estate prices will be increasing again this year.

It may be the prices are high enough already.

Manhattan Real Estate, Part I

The Top of the Market

Above is a rendering of One 57, a 1,000-foot-tall condominium tower that sits atop the Park Hyatt New York and across the street from the southern end of Central Park.

The year before One 57 opened, the most expensive Manhattan home sale had been a condo that fetched $88 million.  The buyer was a Russian billionaire who wanted a home for his daughter, a college student in New York.  (Also, it was rumored, a spot to shelter assets as he and his wife were divorcing.)

Then, One 57 condos began to sell.  In December 2014, a deal closed on an 11,000 square-foot apartment.  It was a duplex (89th and 90th floors; duplexes in New York are two-story apartments).  The buyer, an LLC whose owner is not known, paid $100.5 million.

Last year, the most expensive condo sold in New York was another one at One 57.  Bill Ackman, the Pershing Square hedge fundie, paid $91.5 million for a 14,000-square-foot duplex on floors in the mid 70s.  It was reported that Ackman didn't plan to live in the unit but instead to flip it later for a profit.

Not all the 94 apartments at One 57 are this expensive.  Some are priced around $50 million, and others are even more affordable.  Many of these are owned by faceless corporations; the general belief is that most are fronts for people from other countries who have greater faith in the security of wealth stashed in the United States than in their native lands.

(This trend started long ago in trendy London neighborhoods, where many expensive townhomes and apartments have largely absent owners;  the displacement of full-time local residents has in some cases starved neighborhood businesses of custom.  Nobody who has spent time in midtown Manhattan recently expects such an effect, no matter how many One 57 wannabes and other sumptuous residences are sold in the area.)

In fact, the 34 apartments on One 57's lower floors -- 32 to 39 -- were designed to be rentals, not that ordinary mortals could afford their monthly rates, which ranged from $13,000 to more than $50,000.  Recently, however, the building's developer said these less premium units too would be sold, perhaps a reflection of the health of New York City's property market.

Tomorrow:  Manhattan's Middle Market