Go Beneath Manhattan Market With Subway

Manhattan’s real-estate chattering classes (reporters and the sources they call for every story) were atwitter this past week over new reports showing slight price drops in the borough’s housing market during the last quarter of 2006.

So what?

The average sales price for a Manhattan apartment rested higher in the fourth quarter of last year than in all but one of the quarters of 2005 or 2004, the peak years of the supposed housing boom.

The median, a better market barometer, was just shy of $800,000, according to appraisal firm Miller Samuel in its report for brokerage Prudential Douglas Elliman. And the average price per square foot still tickled the $1,000 mark, something it’s done since late 2005.

Not only did the Manhattan market continue to be prohibitively expensive, but sales actually picked up in the fourth quarter as inventory dropped, meaning that there’s plenty of hearty, moneyed folk among us (or from well outside the five boroughs) willing to plunk down an average of $1,554,645 for a two-bedroom spread, to use one example from the Miller Samuel report.

“The only bubbles bursting are in somebody’s bathtub,” said Darren Sukenik, a top Elliman broker. He cut short a Christmas week getaway to Argentina, hustling back to the city three days early because his assistant kept getting requests for apartment showings. “It’s never busy Christmas week, ever. The buyers are definitely there.”

Indeed. Sales were up 15.5 percent over the third quarter, and more than 55 percent over the fourth quarter of 2005—again, a period nestled amid the hyperbolic boom that never really happened in insulated Manhattan as it did in places like Las Vegas or Miami.

Neither of which has subways.

New York City’s subway is nearly 103 years old, and more people keep riding, despite price fluctuations and the threats of more. Last raised from $1.50 to $2 in 2003, the cost of a subway ride may go up again in 2007, though those in the know (including new M.T.A. executive director Elliot Sander) say it’s not likely.

It wouldn’t make a difference. If the subway fare went from $2 to $2.25, say, or the cartoon-like M.T.A. felt generous and dipped it to $1.50 again, ridership would stay the same or, more likely, increase.

In September 2006, average weekday ridership rose to 5.076 million, according to New York City Transit, the highest level since record-keeping was started in 1970. Monthly ridership in October was up to over 130 million, according to the M.T.A., an increase from the same month in 2005, and a 10-month high.

Like the Manhattan housing market, steady demand and limited options buoy the subway’s popularity. (Has anyone ever told you he or she rides the L train for convenience or the No. 1 for its smell?) The average apartment sales price has been near or well above $1 million since late 2004, and, yet, at the same time, sales have either stayed steady or increased, such as the double-digit percentage increases in the recent fourth quarter.

While other cities grappled in ’06 with genuine housing-market meltdowns (South Florida’s existing home sales slid 16 percent through November, The Miami Herald reported), Manhattan’s merely bumped along.

Some parts of the market struggled—brokers will tell you that one- and two-bedrooms are much more susceptible to mortgage-rate increases, however marginal; but most parts—the luxury market especially—zipped through last year like the A train during its nonstop run from 59th to 125th.

Luxury sales, according to Miller Samuel, were up 55.4 percent year over year in the fourth quarter of 2006, even as the average price per foot stayed above $1,700.

“Everyone still wants to live here,” Mr. Sukenik of Elliman said, and he wasn’t aiming for understatement.

The New York subway has 26 train routes slicing through 656 miles of track. Manhattan has about 10,000 buyers and sellers annually closing deals, with an inventory of (usually) between 4,000 and 7,500 apartments for sale. The options are limited, the prices generally the same. And the location is always Manhattan.