A record number of fourth-quarter sales in Manhattan drove inventory to historic lows, according to a report released Friday by Douglas Elliman Real Estate, while the prices for luxury properties and condos soared, far outpacing the modest gains logged by market as a whole.
“Normally the fourth quarter is the weakest quarter of any given year,” said Jonathan Miller of Miller Samuel Inc., the appraisal firm that complied the data for the report. “We didn’t have that this time.”
Instead, the 3,297 sales in the final months of 2013 were the most Mr. Miller had seen in a fourth quarter in 25 years—up nearly 30% from the same period in 2012. In response, the supply of units on the market shriveled to 4,164, the lowest tally in 14 years.
The year-end buying frenzy was in part the result of demand that had been depressed for years by buyers’ fears about the strength of the recovery—and the housing market. Those same people have recently been gaining the confidence to take the plunge, an urge that has gained urgency as fears have mounted that mortgage rates will finally lift off from their historic lows of recent years.
“There is a lot of pent up demand and a lack of inventory,” said Dottie Herman, president and chief executive of Douglas Elliman. “You can’t take your time to shop around.”
While the robust fourth quarter did break some records, it also continued the year-long trends of low inventory and high demand, meaning relatively modest overall growth. Several reports also released Friday painted a steady market overall, with median sale prices gaining by single-digit percentages in Manhattan.
But within that market, condos and co-ops performed very differently.
For instance, median sale prices for condos reached an all-time high of $1.32 million, up 14.3% from the same time last year, in a spike that owed primarily to a different sales mix as more pricey larger units hit the market, according to Mr. Miller.
Prices also got a lift from the number of new and/or luxury units sold. The median sales price for luxury condos and co-ops rose to $4.9 million, a 10.4% increase over the same time last year. But in the huge market for co-ops, which comprise about 60% of sales, conditions were much more subdued. There median prices rose a modest 4.6% over the course of last year to $680,000.
Several other market reports painted a similar picture.
The year-end report from the Corcoran Group on the Manhattan market noted the drastic increase in prices for new luxury housing, with a whopping 72% year-over-year increase in the median sale price of new luxury housing, which hit $7.85 million. However, sales topping $5 million only made up 5% of the market.
And while 2013 has often been compared to 2007 and 2008, with several record-setting luxury sales this year, the annualized median sale price at year end was about 16% below where it stood in the second quarter of 2008, according to Mr. Miller – and that might be a good thing.
The double-digit price growth and easy credit associated with the last boom turned out to be stuff bubbles are made of, while this time around the industry seems to be building itself up on more solid footing.