The penthouse apartment at the 50 United Nations Plaza building in New York hosts a pool party. Getty Images/Michael Nagle/Bloomberg According to fresh statistics, Manhattan real estate prices hit an all-time high in the second quarter as buyers returned to the city and boosted demand for the city’s largest, most costly apartments. According to a survey from Douglas Elliman and Miller Samuel, the median sales price for Manhattan apartments surpassed $999,000 in the second quarter, the highest on record. In the third quarter, average sale prices increased by 12% to $1.9 million. The price increases and diminishing inventory indicate that the Manhattan real estate recovery is gaining traction, as more families seek larger apartments and purchasers seek to take advantage of cheaper costs and low borrowing rates. “It’s a sign of the market’s fervor and intensity,” said Jonathan Miller, CEO of Miller Samuel, a real estate appraisal firm. “It’s bouncing back much faster than most people anticipated.” In the second quarter, there were 3,417 sales, up 150 percent over the same period last year, when many New Yorkers were fleeing the city due to the pandemic and Covid restrictions prevented apartments from being seen for much of the quarter. However, as compared to pre-pandemic levels, the speed was also fast. According to Miller Samuel, the second quarter was the best since 2007. Bidding wars were at an all-time high, surpassing those seen in the previous two and a half years. As a result of the buying frenzy, there are fewer apartments on the market. According to Miller, listing inventory is down 27% from a year ago, and the supply of properties for sale (at 6.9 months) is now lower than the historical norm of eight to nine months. The most rapid growth can be found at the very top of the market — literally. According to Corcoran Market Research, more than 220 penthouses have been sold in Manhattan this year, the most on record. This is up 35% from the 164 penthouse contacts signed in the same period last year, before the outbreak. “As the city reopens, penthouses have proven to be the ideal combination of vast square footage and private outdoor space, as well as all the luxury facilities found only in a full-service building,” said Pamela Liebman, president and CEO of Corcoran. “The notion of creating a home in a’mansion in the sky’ has never been more alluring for high-net-worth individuals.” The high-end market’s strength — above $5 million — represents a significant shift from before the pandemic. There was a downturn in the price range before 2020 due to an excess of high-end apartments and sellers hesitant to decrease prices, while the lower end, between $1 million and $2 million, was strong. Brokers now argue that most of the rise is being driven by the market’s peak, since the wealthiest have become even wealthier as a result of rising stock markets and easy monetary policy throughout the pandemic. In the second quarter, the median sales price for three- and four-bedroom units increased by double digits over the first. Nonetheless, according to Miller Samuel, the luxury apartment inventory remains high, at 13 months. And, because many new development buildings don’t publish all of their empty units for fear of oversaturating the market, the true figure is much greater, according to Miller. He added, “You have to account for the’inventory management.'” The penthouse market’s strength has altered the economics of new development. Developers have traditionally sold the penthouse after the majority or all of the other units in a building have been sold. Penthouses were saved for last because they were distinctive and generated a sense of scarcity that enticed purchasers to pay more. Developers are selling penthouses sooner, often as the first sales, as the wealthy are willing to pay more for additional room and outdoor facilities. “Developers are getting what they consider to be a reasonable price for the penthouses now,” Miller added./n
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