Manhattan defies U.S. housing nightmare, sets record
( Reuters )- The U.S. housing market may be a seller's nightmare but Manhattan's was a dream in the fourth quarter as foreign buyers pushed up demand while supply stayed tight, sending the average sales price to a record high.
Two swanky condominium projects, The Plaza and 15 Central Park West, helped propel the average price of a Manhattan apartment to a record $1,439,909, up 17.6 percent from a year earlier and 5.1 percent from the third quarter, according to Prudential Douglas Elliman Manhattan Market Overview.
"Foreign demand has been a big part of the story," said Jonathan Miller, director of research at Radar Logic and author of Prudential's quarterly overview reports, but foreigners are not permitted to buy cooperatives.
"In a lot of new development we've seen significant activity from domestic purchasers as well," Miller added.
The average price per square foot of $1,180 set a record, up 18.2 percent from a year earlier and 3.1 percent from the prior quarter, according to the Prudential report.
The median price -- where half the sales prices are above and half below -- rose to $850,000, up 6.4 percent from a year earlier, according to the Prudential report.
The average sales price of a U.S. home overall declined last year. Prospective buyers in many U.S. markets have found prices still too high, and stiffer mortgage requirements arising out of the subprime crisis have also sidelined them.
The overall market suffers from a 10.3-month overhang of supply of homes for sale.
But supply shrank in Manhattan.
The number of apartments for sale fell 13.5 percent to 5,133, according to the Prudential report, while the number of sales rose 3.2 percent to 2,518 units.
According to Terra Holdings, sales prices at The Plaza, a former luxury hotel, and 15 Central Park West averaged nearly $7 million in the fourth quarter, helping to fuel a 51 percent increase in the average price of a Manhattan condominium.
Stripping out The Plaza and 15 Central Park West, the average selling price would have been $1.37 million, a 12 percent rise over the 2006 fourth quarter's $1,223,160, said Terra Holdings, the parent company of residential brokerages Halstead Property and Brown Harris Stevens.
Prices for condominiums, which usually make up half of new sales, rose 51 percent in the fourth quarter to a record $1,851,709, according to Terra Holdings. The average sales price of a cooperative apartment rose 21 percent to a record $1,074,369 in the fourth quarter from a year earlier.
The average sales price for all Manhattan apartments rose 34 percent to a record $1,430,514 in the fourth quarter, while the median price was up 14 percent to a record $828,000, according to Terra.
Figures from the Terra and Prudential reports differ because of the different times at which the organizations receive notice and prices of closed sales.
Gregory Heym of Terra Holdings said the Manhattan apartment market had not yet felt downward pressure from cuts in bonuses on Wall Street, where jobs are on the line as big investment banks take huge write-downs due to the subprime crisis.
"Somebody who's worried about their bonus is going to be hesitant to buy," Heym said. "Somebody who's worried about losing their job is going to be incredibly hesitant to buy."
But any real estate effect probably won't show up until the second half of the year, he said.