Manhattan Apartment Prices Hit Record High
The average apartment price in Manhattan hit a record $1.72 million in 2014, as the New York wealthy and overseas rich continue to seek safety in the New York skyline.
While sales volume is slowing, prices continue to rise in New York as strong demand competes for historically low supply. The average sale price for the year topped the previous peak in 2008, of $1.591 million, according to a report from Douglas Elliman and Miller Samuel Real Estate Appraisers.
For the fourth quarter, average sales prices topped $1.74 million, up 13 percent from the fourth quarter of 2013. The median sales price for the quarter was up 15 percent from a year ago, to $980,000 -- the second highest for a quarter.
The surge in prices shows the high-end real estate boom in New York is still robust as more wealth pours into coveted properties in the top global markets.
The biggest demand and price surge in New York was for new condos, a favorite of overseas buyers. Prices for new development jumped 17 percent over the past year, to an average sales price of $3.156 million, or $1,871 a square foot.
Demand is so strong relative to supply that half of all sales in the quarter were at or above the listing price -- the most in six years, according to the report.
The very top of the market -- the biggest, most expensive apartments -- is performing the best. According to a separate report from Brown Harris Stevens, there were four closings in the fourth quarter with prices above $40 million.
Still, the Manhattan market could face some headwinds in 2015. Inventory, while still well below historical levels, is rapidly rising as more sellers and builders race to cash in on higher prices. Listing inventory was up 20 percent in the fourth quarter compared to a year ago, while inventory for new development was up 103 percent.
As more units in newly built luxury towers come up for sale this year, the rising inventory could put pressure on prices. There were just under 5,000 units on the market in the fourth quarter, up from 4,164 in the fourth quarter of 2013.
Yet Jonathan Miller of Miller Samuel said that inventory for resale properties is a third below long-term averages.
"Rising prices draw in new supply, but that supply is still low," he said.
The stronger dollar could put pressure on overseas buyers, as U.S. real estate becomes more expensive in foreign currency terms, Miller said. But for now, low interest rates and the relatively low prices of New York real estate compared to London, Hong Kong and some other major wealth hubs bode well for prices and demand in 2015.