Average sales prices for all homes, including cooperatives, condominiums and one- to three-family homes, increased 15% citywide to $732,000 from 2006 to 2007, according to REBNY's ResidentialNYC.com report. The average sales price for all New York City apartments rose 11% in 12 months, a figure exceeded by Manhattan with an average sales price of $1.217 million, up 12% from a year earlier.
Data from Brown Harris Stevens indicated an even sharper year-over-year spike in Manhattan apartment prices, with the Q4 '07 average of $1.43 million up 34% from Q4 '06, including a 51% jump in condominium prices there. This rise in prices was offset somewhat by slightly fewer sales during Q4 '07 compared to a year earlier, according to Brown Harris Stevens.
A big factor in the price surge was a substantial gain in the sales of apartments priced over $10 million during the year. "The factors that make our market healthy continue to provide stability, and we are seeing this positive effect most at the high end," says Hall F. Wilkie, president of Brown Harris Stevens.
Brooklyn had the highest percentage increase for apartments, with average sales prices up 14% to $494,000, according to REBNY. Condominium prices saw the biggest increase of any category citywide, rising 17 percent in '07 to approximately $1.03 million. The average price of one- to three-family dwellings rose 7%.
"New York City's residential real estate market continues to prove that it is unlike any other market in the country," says Steven Spinola, president of REBNY. "Our report shows that the city is countering the national downward trend with substantial increases in average sales prices for homes and apartments. The year-to-year increases went beyond Manhattan and covered all five boroughs."
In 2008, residential vacancy rates will remain low throughout the city, but Manhattan may see an uptick of 30 basis points to 2.5%, says Marcus & Millichap Real Estate Investment Services in its 2008 annual report. While supply growth will remain "minimal" this year, demand may soften to a projected slower rate of hiring in the financial services sector. Job growth overall will slow to 0.4% in '08, representing 16,000 new hires compared to 34,300 new positions created last year.
Multifamily permit issuance is up in both Queens and Brooklyn, according to M&M. In the case of Brooklyn, this upturn in permits may continue as rezoning of areas such as Dyker Heights, Fort Hamilton and Bedford-Stuyvesant opens them up for development. Nonetheless, Marcus & Millichap foresees a slowdown in production of market-rate housing to 2,800 units citywide in '08, down from 3,600 units in '07. Asking rents for market-rate units are expected to climb 6.3% to $2,976 per month, while effective rates will climb 6.6% to $2,922 per month, Marcus & Millichap says.
In its first-ever "Year End Manhattan Rental Market Report," the Real Estate Group New York noted that Manhattan's rental market remained strong throughout '07 despite the credit crunch. Citywide, prices rose between 2.2% and 6.5% during the year. "The citywide numbers we're seeing do indicate healthy growth, which suggests that Manhattan real estate has so far managed to weather the nervous conditions of a weakened U.S. housing market," says Daniel Baum, co-founder and COO of TREGNY. "On the other hand, significant rental declines in some areas of the city and all-around softening prices in Q4 '07 may be foreshadowing declines in '08."
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
