The influx of super luxury new developments changed the Manhattan real estate game in 2014, pushing prices to record highs. According to the Elliman report, the average sale price for last year reached $1,718,531, surpassing the pre-recession record set in 2008. Looking at just the fourth quarter, prices are also up. Appraiser and Elliman report preparer Jonathan Miller found that the median price to be $980,000, up nearly 15 percent compared to last year, making it the second highest median price in the last 25 years. The average sales price jumped 13 percent to $1,740,158. "Prices are up for two key reasons," says Miller. "New development contracts from the past few years are beginning to close, and new development is skewed towards high end. Plus, inventory is up 20 percent from last year's 15-year record low but most of that increase is from new development."
When looking at the luxury market, sales of condo closings priced at or above $10 million are up 191 percent compared to last year, according to Urban Compass. Extell's shiny blue beacon One57 is a large part of the luxury market action. In the fourth quarter, One57 saw 10 closings priced above $8 million. Most were way above $8 million: two surpassed $25 million, another came in at $34 million, and three topped $50 million.
Overall, the increase in high-end closings can be partially attributed to the jump in new development inventory, which has more than doubled since last year; the fourth quarter saw 1,440 active listings, while the fourth quarter of 2013 saw just 709, according to Elliman. However, Miller points out that inventory bottomed out in 2013, so the spike is a bit out of context.
"New development inventory is still about 15 percent below the long term average," he says. Re-sale inventory, on the other hand, is only up 2.9 percent from last year, which means that the middle of the market is still lacking. Urban Compass found that for the first quarter since the recession, condos made up the bulk of inventory, and since condos are historically more expensive than co-ops, this helped push prices higher. The Brown Harris Stevens report puts the average price for new developments at $3,186,953, an 11 percent increase from last year.
Higher prices meant that even though the number of sales was down, the fourth quarter still recorded the largest dollar volume of total sales closed, according to Urban Compass, which tallied a total of $5.4 billion in transactions. The Elliman report puts the total number of closed sales at 2,718, about an 18 percent drop from last quarter, and the fourth quarter of 2013. Even still, the number is the second highest for a fourth quarter, topped only by last year's record. But Miller says that 2013 "was an anomaly," and sales volume was "bloated by the release of pent-up demand between Lehman and the Fiscal cliff at that end of 2012. A fear of mortgage rates spiking in 2013 pulled all the fence sitters into the market on top of normal demand."
So what does 2015 have in store? "Slow inventory increase will keep the pressure on prices across the majority of the non-luxury, non-new development market," says Miller. And given that Manhattan will see more condos this year than any year since 2007, prices aren't about to come down.
· Market Reports [Elliman]
· Manhattan 2014 Market Report [Urban Compass]
· Market Reports [BHS]
· 2014 Has Been the Most Expensive Year Ever for Manhattan [Curbed]
· Luxury Developments Drive New Price Records In Manhattan [Curbed]
·All Market Report coverage [Curbed]