Manhattan Co-ops - Manhattan Houses for Sale

Despite an increase in supply and a decrease in demand, prices held firm or increased for the quarter. However,
prices are not expected to hold if supply and demand trends continue to deteriorate.
Prices for Manhattan co-ops rose for the quarter
The average sales price of a co-op increased 3.3% to $711,720 over the prior quarter average of $689,002. In addition, the median sales price increased 3.5% to $440,000 over the prior quarter average of $425,000. The average price per square foot, however, posted a 1% loss from $621 per square foot last quarter to $615 per square foot this quarter.
Supply of Manhattan co-ops increased, demand decreased
Listing inventory increased 10.2% over the prior quarter to 4,367 units, the highest number of listings since we began recording them in 2000. More significantly, there were 72.7% more listings than the prior year quarter. The prior year quarter was considered an anomaly, however, since new listings were generally held off the market in the first two quarters after 9/11, thereby exaggerating the increase this quarter. Continued inventory growth at this pace could depress prices over the next several quarters, however. Demand weakened as the number of co-op sales fell 10.7% to 1,153 units from the prior quarter, the fewest number of transactions to occur since the second quarter of 2001. This market condition is best illustrated by the absorption rate, which is the number of months it would take to sell all existing inventory. Based on conditions in the current quarter, it would take 11.4 months to absorb all inventory, nearly double the 6-month absorption rate seen in the prior year quarter.
Negotiability and marketing time held, despite the increase in inventory It took 145 days, or 7 fewer days to sell an apartment than the prior quarter average of 152 days. The average discount from list price also saw modest improvement dropping to 3.7% from the 4.1% seen in the prior quarter. The improvement of a Manhattan apartment was 1,189 square feet, down 16.9% from 1,431 square foot average in the same quarter two years ago.
Overview
The current quarter is best defined as a 'pause' in activity. The uncertainty of the war and a weak economy likely played a significant role in the reduction in the number of sales this quarter as well as some price erosion. For perspective, the number of sales actually increased 15.8% after the 1991 Gulf War from being depressed in the prior two quarters. At that time, a 30-year fixed mortgage rate was 9.5% after hovering between 10% and 11% for the prior two years and the Dow Jones Industrial Average bottomed out and began its ascent. Most importantly, the real estate market was still trying to absorb a significant over supply of housing from the conversion and construction boom of the prior decade that ultimately took 4 more years to complete. The situation is quite different today. There remains limited conversion and construction activity of owner-occupied housing and mortgage rates have been falling to near historic lows. Yet local and national economies remain weak, real estate taxes are increasing and large city and federal budget deficits loom. There is speculation that the Federal Reserve may drop interest rates further to stimulate the economy. The Fed has indicated, however, they will be cautious about making the housing market any stronger than it already is. Nationwide, housing still continues to be one of the best performing sectors of the economy. Going forward, if the economy improves over the next few quarters and mortgage rates eventually begin to rise, there may be a ‘soft-handoff’ to a market that is less dependent on mortgage rates and more dependent on job growth.

Co-op Market Matrix Current Qtr %Chg Prior Qtr %Chg Prior Yr Qtr
Average Sales Price $711,720 3.3% $689,002 6.6% $667,764
Average Price Per Sq Ft $615 -1.0% $621 15.6% $532
Median Sales Price $440,000 3.5% $425,000 9.5% $402,000
Number of Sales 1,153 -10.7% 1,291 -9.3% 1,271
Average Days On Market 145 -4.6% 152 16.0% 125
Average Discount from List Price 3.7% 4.1% 5.4%
Manhattan Coop Apartment Mix % of Total Avg. Price
Studio 19% $247,951
1-bedroom 36% $429,363
2-bedroom 39% $831,816
3-bedroom 4% $2,485,291
4+ bedroom 2% $5,347,349
Sales of Manhattan co-ops studios and 1-bedrooms gained further ground
The studio and 1-bedroom markets expanded 1% to a 55% market share up from 54% in the prior quarter. For perspective, market share of this category was 41% in the second quarter of 2001, just prior to entering the recession. It should be noted that these markets showed the most improvement in average sales price. The average sales price of a Manhattan studio apartment was $247,951, an increase 5.5% over the prior quarter and 15.4% over the prior year quarter. The 1-bedroom market showed a similar pattern by posting a 5.5% increase in average sales price to $429,363 which is 8.5% higher than the prior year quarter. On the contrary, 2-bedroom apartments declined 7.3% to $831,816 but its market share remained unchanged at 39%.
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Manhattan Houses for Sale - Manhattan Co-ops