Through the housing booms and credit busts, the Manhattan residential sales market had a fairly nondescript decade ending in December 2011.
Prices across all housing stock increased about how one would expect they would have since 2002, and sales activity was remarkably similar in 2002 and 2011. Median sales prices for condominiums and co-ops increased 89 percent to $850,000 and median townhouse prices rose 112 percent to $3.65 million from 2002 to 2011, according to a pair of Manhattan market reports released today by Prudential Douglas Elliman.
“The two end points tell one story but the path taken between those points tells another,” said Miller Samuel CEO Jonathan Miller, who prepared the report. He compared it to the 2011 stock market, which closed the year essentially where it began, but only after months of extreme volatility.
The average number of condo and co-op sales per year during the 10-year period was 9,461. Activity settled at 10,161 sales in 2011, just 7 percent more than the 9,509 recorded in 2002. But between 2003 and 2006, no one year had more than 8,802 sales; the mid-8,000s were the benchmark of a stable market. In 2007 the number skyrocketed to 13,490, and outside the exceptionally inactive year of 2009, settled above 10,000 annually. Miller said that the combination of the development boom earlier in the decade and a slight consumer shift away from renting towards buying, likely means five-digit sales numbers will be the benchmark of a stable market moving forward.
Manhattan average and median sales prices tell a similar tale. Overall, the 80 percent gain in average price to $1.43 million, and the aforementioned median sales price appreciation, are in line with expectations for a 10-year period, Miller said. But in between those end points were years of massive fluctuation, peaking in 2008.
In fact, the 2002 prices are skewed low, Miller said, because of the aftershock of the Sept.11 attacks on New York City. But the housing market snapped out of its funk in 2004, as median prices and average prices increased 22 percent and 18 percent, respectively.
While the median price today for condos and co-ops is back at 2007 levels, the average price remains higher — surpassed only by the $1.59 million average recorded in 2008 — because of the strength of the high-end sector of the market.
Over the course of the 10-year period, sales activity for three- and four-bedroom condos and co-ops increased 117 percent and 191 percent respectively, while changes in smaller units were negligible. Though one- and two-bedroom units still comprise more than 70 percent of the overall condo and co-op market, the increase in larger-unit sales activity is drastic. Miller said in recent years more developers have built with an eye on larger units. But almost the entire increase in sales activity for the larger unit types occurred since 2008, when luxury buyers with eyes on larger units ruled the market.
The one major change was the gradual tilt towards a sales market dominated by condos. They comprised 50 percent of the apartment sales market last year compared to 36 percent of it in 2002.
Over the last decade, the Manhattan townhouse market could also be characterized as essentially normal. Miller isolates townhouses with a separate report because they can skew the data and they typically represent only about 2 percent of all sales, gauging just the top of the market.
As a result, it comes as little surprise that sales activity increased 22 percent between 2010 and 2011 to 240 transactions, the highest total since the credit crunch. But Miller said it’s about on point with the 10-year average of 250 sales. And while the median price in 2011 was down 5 percent on a year-over-year basis, a decade’s worth of data show a 112 percent increase. The hefty price growth isn’t at all of the ordinary, according to Miller, because there’s so little new construction in the townhouse market. In fact, the townhouse stock is so old that the average townhouse sold during the decade was built in 1908.
“The numbers make the case for a long-term view of housing,” he said. “Real estate professionals lost their way, viewing it as a short-term investment. As an asset it’s slow-moving, but we had a different standard during the boom of double-digit price increases and that’s the wrong approach.”
So what’s the reason for issuing quarterly market reports? “They’re a snapshot of the market at that moment for all the people fascinated by real estate,” he said. “But property shouldn’t be considered a liquid asset like a stock is.”