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Manhattan Market Sees Higher Prices, But a Dip in Sales

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Third quarter market reports show that Manhattan home prices increased yet again. The Elliman report, prepared by appraiser and graph guru Jonathan Miller, found the median price rose 4 percent compared to the same period last year, hitting $908,242 (but that's slightly down from last quarter), while the average price jumped more than 17 percent to $1,684,729 (slightly up from last quarter). "Prices have been rising in each of the past four quarters as limited supply has finally pressed prices higher," says Miller. He notes that the increase in the average price is largely thanks to a lot of activity at the high end of the market. There were 55 sales at $10 million or higher last quarter, up from 29 during the third quarter of 2013. And since new development inventory is up 101 percent and is largely at the top of the market, Miller says we should "expect to see overall prices influenced by more new development closings over the next year."

Overall, inventory increased 27.6 percent compared to year ago levels, but keep in mind that inventory bottomed out in fourth quarter of last year. "Supply has been expanding in 2014," says Miller, "but it is still not enough." The data shows that inventory is still 18 percent below the decade quarterly average of 7,130. And what new inventory there is, is largely condos—co-op inventory is up almost 9 percent, but condo inventory is up 52.5 percent. The inaugural report from Urban Compass also found that inventory is up, with the bulk of new units being one- and two-bedroom homes priced above $1 million.

The Elliman report and the Urban Compass report both found that the number of sales is down—more than 13 percent, according to Elliman—but they're still moving at a fast pace. Miller points out that the third quarter of 2013 saw the most third quarter sales in 25 years, so naturally, the number of transactions will be less this year. "Last year, much of the year was characterize by record volume," says Miller. "This year was a downshift from the record pace, but still heavy volume." Of the sales that closed, nearly half were at or above their asking price.

Several report preparers noted that the dip in sales is linked to higher prices. Warburg Realty President Frederick Peters said that "the majority of buyers are displaying a high degree of price sensitivity. If they feel it costs too much, they simply don't want it." As such, the average number of days homes sat on the market increased, especially for units in the luxury price range.

The Urban Compass report notes that "the Manhattan market demonstrated considerable strength, showing signs we are now entering a more stable and less frenzied, frothy market." Even with transactions down, Urban Compass reports that there was "a total value of $6 billion in condo and co-op sales this quarter," which is "the highest value closed since the $7.5B peak in the second quarter of 2008."
· 3Q Manhattan Sales Report [Elliman]
· Manhattan Residential Market Report 3Q14 [BHS]
· 3Q2014 Manhattan Market Compass [Urban Compass]
· Market Reports [Bond]
· Market Reports [Warburg]
· All Market Report coverage [Curbed]