New York City Real Estate

Manhattan real estate market – a mixed story

Manhattan apartment sales were the strongest in two years, although property prices at the top end continued to face pressure. The median sales price in Manhattan increased with 8% over the last 12 months but the average sales price fell approx. 2%. The decline in average sales price can be explained due to the significant drop in prices at the luxury market segments. It is also interesting to note that discounts are more common, and bidding wars have become less common.

The major reason for the decline in average property price in Manhattan is the sharp reduction in price for luxury and new construction developments. Prices for new construction condos are down sharply over the last 12 months – namely 13% drop in median price per square foot or 19% drop in average price per square foot for new construction developments! Based on the real estate agency Corcoran, new development prices however are still up significantly over the last 5 years so it remains to be seen whether the decline this quarter is just an outlier.

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For foreign investors, it is more important to look at the resale condo market. Foreign buyers always buy condo apartments (and not coop apartments as those apartments are impossible to purchase due to approvals required from Boards and they have very restrictive leasing options). Median prices and average price of second hand condos have increased with 6% and 5% respectively over the last 12 months. The median price of a condo apartment in Manhattan is now approximately $1.4 million. The graph shows that the median prices and price per square foot for condos in Manhattan has steadily moved up over the last many years.

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As a conclusion, we are observing a mixed story in the Manhattan real estate market. Certainly there is a continued downward pressure on the luxury and new construction development market segment. At the same time, the second hand condo market keeps on moving upwards steadily.

Source: CNBC and real estate brokerage reports, October 2017

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