Manhattan Residential Price Increase Led by Luxury Segment

Town Residential’s fourth quarter Manhattan condo and co-op sales report shows that luxury properties were responsible for most of the upward growth in sales prices.
56 LEONARD TOWER

Luxury condos like 56 Leonard (developed by Hines and Alexico Group) were the main driver behind and increase in residential sales prices in Manhattan during the fourth quarter.

According to Town Residential’s most recent Manhattan condo and co-op sales report, which covers the fourth quarter of 2013, prices were driven upward for the quarter mostly by luxury properties. “Luxury” has a specific definition in this context, consisting of the top 10 percent of unit sales by price, excluding townhouses. Luxury condos and co-ops tend to be larger two- and three-or-more bedroom units.

The average luxury price, about $5.52 million in the fourth quarter of last year, was up 5 percent compared with the previous quarter, while the median luxury price, about $4.6 million, gained 10.9 percent quarter-over-quarter, according to Town Residential. During 4Q the entry-level price in the luxury category was about $3.05 million.

The average sales price for all Manhattan condos and co-ops trading in the fourth quarter didn’t increase as much as the luxury class, while the median didn’t increase at all. The report notes that the average in 4Q was $1.47 million, an increase of 1.44 percent from the third quarter, while the median was actually down quarter-over-quarter by 2.48 percent to $840,000.

The report also noted that condos represented fewer sales during 4Q than co-ops, only 41 percent of the total, but average condo prices on the whole were up 5.77 percent compared with the previous quarter. The average sale price for a Manhattan co-op dropped by about 5 percent compared with the previous quarter.

Though luxury sales drove overall pricing upward, condo and co-op sales between $500,000 and $1 million still represented the largest category of sales activity, as it did throughout all of 2013. Such sales accounted for 36 percent of the market during the fourth quarter, while sales between $3 million to $5 million were 6 percent of the transactions, and those over $5 million were 4 percent.

Looking ahead, developers seem eager to build more for-sale properties citywide in New York in 2014, says Town chief statistician and economist Damien Parker. There was about a 60 percent year-over-year increase in cumulative year-to-date building permits reported for the month of November, he explains, which “shows that developers are taking advantage of current and future asset prices while borrowing costs remain relatively low.”