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Manhattan home prices: Still crazy

Blog by Ian Watt | January 10th, 2008

Manhattan home prices: Still crazy

It's a seller's market in the Big Apple as overseas buyers, empty nesters and Wall Street workers compete for the few homes for sale.

By Les Christie, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Manhattan real estate continues to buck national trends - New York home prices soared during the last three months of the year, according to several surveys released Thursday.

The median (midpoint) price for a condo or co-op apartment rose 15 percent to $915,000, according to the Corcoran Group, one of New York's biggest brokers. Surveys by two other brokerages, Brown Harris Stevens and Halstead, showed 14 percent growth, to $828,000.

A survey by Prudential Douglas Elliman showed lower growth, at 6.4 percent, but a median price of $850,000.

"It's like the Energizer bunny," said Pam Liebman, CEO of Corcoran. "It just keeps going and going and going."

Despite a mini-building boom, demand for Manhattan apartments continued to outstrip supply.

Several thousand new condo units have come on to the market this year, according to Jonathan Miller of Radar Logic, which compiled the statistics for Prudential Douglas Elliman. But the number of homes for sale dropped sharply, with a 13.5 percent decline.

New supply in New York does not come to market swiftly - there's simply too little developable land. Plus, notoriously Byzantine zoning and building regulations makes building expensive.

In the most in-demand areas, such as 15 Central Park West, near Columbus Circle, prices can take the breath away. A two-bedroom, 2,750 square foot condo in a new, luxury building recently sold for $12.5 million.

Several factors buoyed the Manhattan market:

Bonus Money Wall Street brokerages, despite a hit from cratering mortgage bonds, still paid out big, end-of-year bonuses.

Overseas Buyers Another major factor is the influence of foreign buyers, according to Greg Heym, chief economist for Brown Harris Stevens. The dollar's decline made buying in Manhattan something of a bargain for them.

Low Interest Rates On the lower end, reasonable interest rates kept monthly mortgage payments within reach for many New Yorkers.

Rising Population Also adding to demand has been an upswing in the population of Manhattan - it grew nearly 5 percent from 2000 through mid-2006.

"We have a tremendous demand from a wide range of buyers including new families, retired couples returning to the city and an increasing amount of foreign buyers," said Diane Ramirez, president of Halstead Property. "Right now, there is just not enough inventory."

Even Manhattan's bargain (comparatively) areas are getting into the act. "Prices are way up, uptown," said Miller, "and the market share is much higher." Many Manhattanites, priced out of other areas, have turned to Harlem and points north.

Corcoran lists a two-bedroom, 2,000 square-foot condo in Central Harlem for nearly $1.8 million. All told, Harlem prices rose a whopping 56 percent this year, to a median of $610,000, according to Halstead.

According to Liebman, Harlem will be a very hot market. "It's easily commutable, many of the buildings have Central Park views and there are a lot of great buildings to redevelop; it has good bones. You get the most bang for the buck there."

None of the brokers forecast any major change in 2008, good or bad. "We continue to have a strong and stable residential market in Manhattan with new records and unbelievable closings in high-end new developments," said Ramirez. To top of page