Since inventory remains scarce (down 31.3 percent YoY), as do news alerts without mention of the royal baby, I thought I'd take a look at where new development is appearing in the market. I pared down the data a lot to get to the point.
Here's the methodology: I only looked at the original listing price of active Manhattan condos that were part of a new construction or gut rehab conversion project that entered the market in the past couple of years. All listings currently under contract were omitted. I didn't include listings from Northern Manhattan since the balance of the island represents about 95 percent of the activity and the regions (Downtown, West Side, East Side) are similar in price, I wanted to use them to provide context to the top 10 percent of the overall Manhattan market. Northern Manhattan prices run at about half the remainder of Manhattan. I realize that a number of the new projects haven't designate all their inventory as active and that is all I am looking at, however the pricing of the shadow they hold is likely similar in price in the aggregate. There's a lot of disclaimers here but I wanted to cut to the chase so to speak.
One of the points I've been making is that the new development product entering the market is that it doesn't address much of the Manhattan market's supply shortage. New apartment stock is largely being added to the top 10 percent of the market. The luxury threshold for the top 10 percent of the market was $2,950,000 in 2Q 2013 and averaged $2,907,204 over the past several years as represented by the purple line on the chart.
The chart is a scattergram of active new development listings in the Downtown, East Side, and West Side regions that are not under contract. Here are some metrics of this subset of the market:
Average Sales Price: $9,300,461
Median Sales Price: $4,975,000
Above Luxury Threshold: 73.1 percent
The Manhattan 2Q 2013 results below were quite a bit lower than the new development subset above:
Average Sales Price: $1,425,403
Median Sales Price: $865,000
From this we can deduce that new development will not be an adequate source of new supply for 90 percent of the Manhattan housing market since it also looks like a lot of new product is entering the market in the coming year is more of the same?high end.