Several major New York City brokerage firms have released their fourth quarter and annual numbers. The defining characteristic of each report was the same: The New York City real estate market’s stark contrast with the national market.
Whereas prices fell nationally during 2007, several New York brokers have reported strong growth in real estate value. Prudential Douglas Elliman, for instance, reports that average apartment values in Manhattan during the 4Q of 2007 increased 17.6% over the last quarter of 2006. According to the report, the average apartment in Manhattan now costs roughly $1.4 million.
Other signs of the market’s fundamental strengths are apparent from the report. Apartment sales increased 3.2% in the past year; apartment inventory – the number of apartments for sale at a given time – fell about thirteen percent, and the typical apartment sold eighteen days faster than in 2006.
Interestingly, the report noted that much of the increase in the average price has come from the recent uptick in demand for apartments that cost over $10 million. In general, the growth numbers for the luxury market are far greater than those of other segments of the city’ real estate market.
Interestingly, much of this is due to the expansion in the luxury condo market. Condos were, until recently, not much more than a blip in the New York City market, which is largely dominated by co-ops and regular apartments. However, this year, two major buildings that are made up of luxury condos, the Plaza and 15 Central Park West, have become major features of the city’s luxury market.
Some experts say that the luxury market’s effect on the rest of the real estate market has not been this profound since the end of the dot-com boom, which created a whole new class of multi-millionaires.
Which isn’t to say that the luxury market carried the market during 2007. Instead, demand rose in each major section of the market. Something different, however, is expected in 2008. Many experts expect the growth of the city’s real estate market, in general, to be relatively slow during the year. The luxury market, though, relatively sheltered as it is from the national market, is expected to be one of the few signs of strength throughout the rest of the year.
With the possibility of the luxury market carrying the rest of the city’s real estate market in 2008, becoming growing, it appears that the 2008 luxury market might provide one of the few instances where a rising tide actually does lift all boats.