The Manhattan residential sales market was stable in the second quarter, according to reports released Tuesday. But a decline in inventory is likely to tip the price scale later this year.
The condominium and co-op median sales price was up roughly 2% in the second quarter, according to four market reports. Streeteasy.com recorded the median price at $840,000 for the quarter, while The Corcoran Group, Halstead Property and Brown Harris Stevens (the latter two which are sister brokerages) said the median sales price was $850,000. Only one report, by Prudential Douglas Elliman and prepared by Miller Samuel Inc., said the median sales price had dipped—2.5% to $829,000.
“The market is moving at a healthy pace now,” said Dottie Herman, CEO of Prudential Douglas Elliman. “Unlike the boom times, people are not bidding prices up to ridiculous levels. They are paying what makes economic sense.”
The entry-level apartment—studios and one-bedrooms—continued to fuel sales activity, representing 52.9% of all sales that closed during the quarter. It was the third consecutive quarter that smaller apartments represented more than half of all sales during a three-month time period, according to the Elliman report. That segment of the market is being boosted by historically low interest rates and rising rental prices across Manhattan, Ms. Herman said.
“We are seeing buyers in all price points,” said Jim Gricar, general sales manager at Halstead. “Large apartments sold and smaller apartments sold as well. I was slightly surprised but heartened.” There were 2,647 condo and co-op sales in the quarter, unchanged from the same period a year ago, the Elliman report indicated.
The luxury market continued to fare well. The second quarter saw half a dozen sales above $20 million, according to Halstead and Brown Harris Stevens. A $70 million penthouse sale at The Ritz-Carlton New York, Central Park, at 50 Central Park South, was the largest deal during the quarter. Casino mogul Steve Wynn was reportedly the buyer of that 10,882-square-foot pad.
“The upper end of the market is strong,” said Hall Willkie, president of Brown Harris Stevens. “These large, highly publicized sales have an impact on the entire market. They give everyone confidence in buying and believing in New York City real estate.”
But there is one segment of the residential market that remains soft: the two-bedroom market, said Jonathan Miller, chief executive of Miller Samuel. Sales of that sized apartment made up 31.9% of all sales during the quarter, well below the 20-year quarterly average of 40.8%, according to the Elliman report.
“The middle of the market is not performing as well as the low and high end of the market,” Mr. Miller said. “Consumers don’t have enough equity to trade up from an entry-level apartment, and other consumers are just being cautious.”
Despite the overall good news, the declining inventory may push prices up next quarter. Listing inventory fell 13.5% to 6,981 during the second quarter, the Elliman report showed. Similarly, Corcoran reported a 12% drop, to 8,060 apartments.
“Tighter inventory eventually leads to upward price pressure,” Mr. Miller said. “Inventory is tight because of the lack of product brought to the market.”
That is mostly because of the halt in new condo construction in the wake of the recession. While construction activity is resuming, most of the apartments in new condo developments won’t be up for grabs for another year or two. Ms. Herman said she is already seeing higher price points being considered for new condos that are in the planning stages. “Developers are pricing very aggressively,” she said.