The average price of a Manhattan apartment hit $1,369,486 in the third quarter of 2007, which ended Sunday. Though nearly a record, it’s merely par for the course—it should scream, but it’s really a whisper.
The story of the average apartment price in Manhattan is one of gradualness, a collection of bumps and minor valleys; and, lately, the bumps have been mild and the valleys more common than many think.
This most recent quarter’s average price increase—2.7 percent over the second quarter—is the smallest quarterly increase since the third quarter of 2002, when the price rose 1.6 percent over the three-month period before, according to data from appraiser Jonathan Miller of Radar Logic Inc., who prepares a quarterly market report with brokerage Prudential Douglas Elliman.
And during the local housing boom (a boom that’s over or ongoing, depending on whom you ask and when), the holy grail average has dropped quarterly at least four times; it dropped the steepest recently in the third quarter of 2005—over 12 percent.
But this being Manhattan and this being, more importantly, the grumbling time of subprime mortgage crises and crumbling markets throughout the United States, context is king. The average price of $1.369 million-plus, up as it is from the quarter before and the year before, can be seen in the current national context as an affirmation, like some hand of the invisible market god, nonchalantly sweeping away the negative talk of recent months—at least for this week and maybe next.
For a short while now, New Yorkers’ tongues can wag about the health of their housing market, and no one will talk about the tougher times nationally. Or, if they do at all, they’ll speak of them as a contrast, as in: Can you believe what homes are selling for in Manhattan? Just look at the rest of the country!
Still, even by mad Manhattan standards, things are on the decline—or, at the least, they’re no longer on the ascendancy and haven’t been for a while.
In the past 18 years, the average sales price for a Manhattan apartment has increased generally less than 10 percent annually, unless it’s dropped. In 1995, for instance, the average dropped 9.1 percent from 1994, according to data from Mr. Miller.
The annual increases have been sharpest this decade. In 2000, the average jumped 37.2 percent from 1999; in 2004 and 2005, it increased around 20 percent each year from the year before. The average has not declined annually since 1995. But the increase was much more gradual (and true to norm) from 2005 to 2006—only 6.1 percent.
And, so far in 2007, the year-to-year increases have either been mild or nonexistent. From the first quarter of 2006 to the first quarter of 2007, the average apartment sales price declined nearly 1 percent; from the second quarter to the second quarter, it declined again, this time over 3 percent. And why not? By the end of the second quarter last year, the average stood at an all-time high of $1,386,193.
It’s not there any more.
And what of the other price measures? The median apartment sales price dropped 3.4 percent quarter to quarter to $864,397, according to Mr. Miller, though it did increase slightly from the third quarter of 2006. The price per foot set a record, the average traveling 0.4 percent to a record $1,144 in the third over the second quarter.
So, up they may go. But …
Despite the year-to-year increase this third quarter (a mild 6.3 percent bump), the average sales price for a Manhattan apartment appears, historically, to have reached the limits of its shock value. An average of $1.5 million might’ve seemed reachable last year or in 2005; now, not.
And that’s with a spirited luxury market, where prices increased quarterly and annually by every measure in the third quarter. The average sales price for the top 10 percent of deals in the market was nearly $5.1 million, according to Mr. Miller, and the median $3.95 million.
Even so, bring on the requiems: The shock is dead and the wave crested. Manhattan apartment prices seem back to what they do best—rising and falling slightly.