If you need proof that Manhattan’s real estate market has gone from “pricey” to “ridiculously out of reach” in the past decade, the latest market report from Douglas Elliman is here to help. It explores Manhattan co-op, condo, and townhouse sales from 2007 to 2016, and as you might guess, the price differences are striking.
The median sales price in 2007 for co-ops and condos was $860,000; that price leapt a whopping 27.9 percent to $1.1 million in 2016. Median sales price for a townhouse came in at $3.125 million in 2007, but have since leaped 58.3 percent higher to $4.97 million.
Jonathan Miller, the man behind the numbers, notes that the start of the last decade, in 2007, was marked by high interest rates and the highest volume of Manhattan sales he had ever recorded. “The interest rates a decade ago were roughly two percent higher than they were now,” Miller says.
In the past few years interest rates have fallen and remained low, while the Manhattan housing market has been a bit more volatile. “If the economy is stronger and the rates are a little higher, it doesn’t matter,” Miller notes. “There’s other factors that contribute to rising and falling housing crisis and housing activity … it’s not purely related to interest rates.”
The close of the decade, in 2016, was marked by “the phenomenon of legacy contracts,” Miller says. He’s referring to contracts signed a few years ago—mostly between 2013 and 2015—for new development that closed over the past year. (See: 432 Park Avenue, 30 Park Place, etc.) In effect, records were set across the board last year. The average condo and co-op sales price exceeded $2 million for the first time, while the median sales price hit $1.1 million, and the average price per square foot increased 13.3 percent to $1,771.
Miller also noticed that in every year since 2013, sales activity has been declining. “For perspective, sales activity is still unusually high, but it’s not at record levels,” he says. The reason? There was a ton of pent-up demand that year, partly the result of the market downturn a few years earlier.
“It’s like the skies cleared and there was a very optimistic outlook after the election of 2012,” Miller says. “All the people on the fence jumped in, and we had a release of pent up demand.” For comparison, the number of sales for co-ops and condos was 13,430 in 2007, 12,735 in 2013, and 11,459 in 2016.
On to townhouses—and in short, the townhouse market hasn’t been affordable in Manhattan for 10 solid years. Prices in all areas have shown gains across the decade. In Downtown Manhattan, the average price for a townhouse rose from $4.3 million in 2007 to $7.525 million in 2016. The average for an East Side townhouse rose slightly from $9.7 million to $9.78 million, while West Side townhouses rose from $5.5 million to $7.2 million.
Northern Manhattan townhouses saw a 54 percent price jump over the decade, from $1.36 million to $2.1 million. Finally, the upper 10 percent of all Manhattan townhouse sales averaged at $17.8 million in 2007 and $20.6 million in 2016. (That’s compared to 34 luxury townhouse sales in 2007 and 26 luxury sales in 2016.)
But in 2016, Manhattan townhouse sales weren’t quite as strong as co-op and condo sales—in fact, 2016 marked the third slowest-paced townhouse market in a dozen years. The sales prices slipped from 2015, with the median sales down 5.3 percent to $4.97 million and the average sales price down 9 percent to $6.28 million. The number of homes listed also declined as more “aspirationally priced” inventory came off the market.
So what does all of this tell us about the upcoming year? Expect fewer record sales prices for condos and co-ops, Miller says. “That retroactive pipeline of legacy contracts in going to run out in 2017,” he explains. “Imagine a $2 million average sales price record, and this year it could be $1.6 million.”
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