Guests attend a pool party at the penthouse apartment in the 50 United Nations Plaza building in New York.
Michael Nagel | Bloomberg | Getty Images
Manhattan real estate prices hit an all-time high in the second quarter as shoppers returned to town and new reports boosted demand for the largest, most expensive apartments.
The average resale price for Manhattan apartments reached $ 999,000 in the second quarter, the highest ever, according to a report by Douglas Elliman and Miller Samuel. Average sales prices rose 12% to over $ 1.9 million for the quarter.
The surge in prices and shrinking inventories suggest that the rebound in Manhattan real estate continues to pick up as more families buy larger homes and buyers seek lower prices and low mortgage rates.
“It’s a sign of the hustle and bustle of the market,” said Jonathan Miller, CEO of real estate appraisal firm Miller Samuel. “It recovers much faster than most participants expected.”
There were 3,417 sales in the second quarter – a 150% year-over-year increase as many New Yorkers left town during the pandemic and Covid restrictions prevented homes from being displayed for much of the quarter. However, the pace has also been robust compared to pre-pandemic levels. It was the strongest second quarter since 2007, according to Miller Samuel. The bidding wars were at their highest pace in two and a half years.
The buying frenzy has resulted in fewer apartments on the market. The supply inventory was down 27% year over year, and the supply of homes for sale – at 6.9 months – is now below the historical average of about eight to nine months, Miller said.
The strongest growth is at the top of the market – in the truest sense of the word. According to Corcoran Market Research, more than 220 penthouses have been sold in Manhattan this year, the strongest ever. This represents a 35% increase over the 164 penthouse contacts signed for the same period in 2019 before the pandemic.
“When the city reopened, penthouses proved to be the perfect formula of lavish square feet, private outdoor space, and all the luxury amenities that can only be found in a full-service building,” said Pamela Liebman, President and CEO of Corcoran. “For wealthy individuals, the prospect of finding their home in a ‘mansion in the sky’ has never been so compelling.”
The strength of the high-end market – over $ 5 million – marks a dramatic turnaround from pre-pandemic times. An oversupply of high-end homes and sellers unwilling to cut prices caused the price range to slow down before 2020, while the lower end was strong at $ 1 million to $ 2 million. Now brokers say the top of the market is driving much of the growth as the rich got even richer during the pandemic with soaring stock markets and loose monetary policy.
The median sales price for three and four-room apartments rose by double digits in the second quarter compared to the first quarter.
Nevertheless, the number of luxury apartments remains high – according to Miller Samuel at 13 months. And since many new development buildings don’t officially list all of their empty units for fear of market oversaturation, the real number is much higher, Miller said.
“You have to be accountable for ‘inventory management’,” he said.
The strength of the penthouse market has also changed the profitability of new buildings. Historically, developers sold the penthouse after most or all of the other apartments in a building were sold. Keeping penthouses last made them special and created a sense of scarcity to encourage buyers to pay more. Now that the wealthy are ready to pay for more space and outdoor features, developers are selling penthouses earlier – sometimes as first-time sales.
“Developers now get a price for the penthouses that they consider fair, so they don’t keep it anymore,” Miller said.