Manhattan Is Condoland!

lab chart 6 Manhattan Is Condoland!The 100 West 18th Street condo will have 43 apartments when it opens this winter on the edge of trendy Chelsea. Nearly 60 percent of these have sold since sales started in March.

The typical buyer has been a financial services professional in his or her 30’s, without children and probably without a significant other. Just two families have bought in the building so far, and all of the buyers are from the greater New York area.

One-quarter are doctors, lawyers, accountants or other generally well-compensated professionals; and about 15 percent work in fashion or some sort of design field. Ten percent of the buyers are younger than 30.

But what makes 100 West 18th Street so representative of the Manhattan market is its prices and its sales velocity. Apartments there approach about $1,400 a square foot, according to Scott Aaron, the director of development for the condo’s developer, The Brauser Group. That’s more than the current average of just under $1,200 a foot for Manhattan condos; and it’s well more than the $1,100 average for co-ops and condos together.

Mr. Aaron said he didn’t know specifics on how buyers were paying these prices, because the sales closings don’t start until January. But, like with most condos, “You have to give us 10 percent down at the contract signing,” Mr. Aaron said. “One-bedrooms started at a million. Now, I think, our cheapest one-bedroom’s a million and two. We have four left or three left.”

Also, the condo’s narrow sales office on 19th Street gets about 20 walk-ins a week, with fewer than 20 units left.

In this way, 100 West 18th Street, unique in itself, typifies the 2007 market: Manhattan condos are much more expensive than co-ops, and, still, they sell fast.

In the second quarter of 2007, it took an average of 115 days to sell a condo from the last listing date, according to appraisal firm Miller Samuel. It took an average of 121 to sell a co-op. And the average, median, and per-square-foot prices of condos were all higher than those of co-ops in the first half of 2007. In fact, the median price of a condo cleared $1 million in the second quarter for only the third time ever, while the median for a co-op was $695,000.

Despite the higher prices, condo sales accounted for nearly 60 percent of all Manhattan apartment sales in the second quarter. That’s unusual. Co-ops are the dominant form of for-sale housing in Manhattan, claiming many of the most coveted and storied residential buildings in the city, if not the world, and they usually well outsell condos; in only three other quarters going back to the 1980’s (two in early 2006 and one in early 2001) have condos outsold co-ops.

Part of the reason for the gradual shift stems from condos like 100 West 18th Street. Sleek spires that sell lifestyle as much as living space, amenities-laden and seemingly always in a coveted neighborhood, these condos accounted for more than 52 percent of the inventory of unsold Manhattan homes in the second quarter (and half in the first quarter); more than one-third of this second-quarter condo inventory came from new developments, Miller Samuel estimates.

So, a smaller slice of the Manhattan housing market has been claiming a bigger chunk of the home sales—and it’s been doing so with higher prices (record prices, in some cases).

Why?

Availability’s one reason. As Miller Samuel noted, there’s a lot of new-development condos gleaming on the sales market right now. Also, price: While condos may be more expensive than co-ops on average, sellers usually require less money down—10 or 20 percent of the apartment’s price vs. as much as 50 percent for co-ops. And then there’s the sales process itself. Why tangle with a co-op board when condos lack that often persnickety gateway?

Finally, business savvy on the part of buyers may be the cause of the recent rise in condo sales. A 2003 study by Miller Samuel and New York University showed that a Manhattan condo was on average 8 percent more valuable than a co-op—$786,137 vs. $727,378 in 2001 dollars.

Whatever the causes, condo sales are on a definite tear—up more than 37 percent from the first quarter (co-op sales were down nearly 10 percent) and up 112.5 percent from the same time last year—and it could be common financial sense driving them. So much for slick marketing.