The Manhattan real estate market for the first quarter of this year rebounded vigorously, with demand for New York City condos and coops feverishly chasing a continued low inventory of available space, according to the latest market analysis by Insignia Douglas Elliman. Available space was down 32% from the previous quarter.

The overall average sales price of Manhattan apartments for the first quarter of 2002 was up 1% to $788,256 over the prior quarter’s $782,282, according to the Insignia Douglas Elliman Manhattan Market Overview, and just 10.1% lower than the $876,612 seen in the booming first quarter of 2001, the second highest quarterly average of the last ten years.

As further evidence of a startling recovery, the median sales price for the first quarter of 2002 was $500,000 – exactly the same it was a year ago at the start of a boom year for real estate. It was also up 5% from the $475,000 median set in the fourth quarter of 2001.

“Especially after the trauma of September 11, I am amazed at the rapid recovery of the city and of the real estate market, a turnaround that has exceeded the most optimistic projections,” commented Paul Purcell, President of Insignia Douglas Elliman, the city’s leading residential real estate firm and a division of Insignia Financial Group, Inc.(NYSE: IFS). “Our brokers have never been busier.”

The Insignia Douglas Elliman Manhattan Market Overview attributes.the quick recovery in part to the Federal Reserve’s two rate reductions in the previous quarter which had “the indirect effect of keeping mortgage rates low and helping the economy recover at a steady pace.”

Tighter Inventory Means Fewer Days on Market

With the available inventory of space down 32% in the face of continued high demand, “it took 120 days, or an average of 14 fewer days then the prior quarter, to sell an apartment,” the Insignia Douglas Elliman Manhattan Market Overview noted. “A level this low has not been seen in two years.”

The first quarter of the year was marked by two other distinctions, the Manhattan Market Overview pointed out:

• The biggest gain in market share by the end of the quarter was in two-bedroom and three-bedroom apartments, up 11.7% in number of sales, a change from the earlier uptick in sales of studios and one-bedrooms.

• A “polarization” between the rental and sales markets became more evident, with rents 10% to 20% below last year while sales prices rose modestly.

Coop Market: Surge in Sales with Modest Price Gains

Overall sales of coops jumped 16.5% in the first quarter of 2002 over the same period last year. The median sales price of $402,000 was up 3.1% over the first quarter of last year and up 4.4% from the fourth quarter, while the average sales price of $667,764 was down 3.1% and 2.8%, respectively.

Average days on market for coops were down by four days to 125 days, as compared to the prior quarter. However, the discount on listing price exceeded 5% for the first time in over three years, indicating sellers are open to price negotiation.

Condo Market: Median Sales Price at Record High

At 11.9% higher than the first quarter of last year, the median sales price of condos reached $705,000, the highest in ten years, while the average sales price of $973,438 was up 2.7% from the fourth quarter of 2001 and down 10.9% from last year’s first quarter.

As compared to coops, condo sales seem far less open to price negotiability. The average 113 days on market for the dwindling inventory of condos is a sharp decline, while the discount on listing price was up fractionally to 4.4% for the quarter.

The Insignia Douglas Elliman Manhattan Market Overview for the first quarter of 2002 also examined two niche markets: the luxury market representing the top 10% of all coop and condo sales, and the loft market, including coops and condos, which is heavily concentrated Downtown.

The average price per square foot of the generally larger luxury apartments was up 13.7% to $1,032 per square foot, as compared to the $908 per square foot seen in the previous quarter, but still 16.5% lower than the $1,266 per square foot of the first quarter of 2001. The average size of these apartments climbed 14.4% to 2,661 square feet.

The median sales price of luxury coops and condos climbed 16.7% from the previous quarter to $1,710,000, a level far below the $2,800,000 median in the first quarter of 2001.

The market for condo and coop lofts rebounded sharply in the first quarter of this year, which is particularly notable since so many lofts are located Downtown close to the September 11 epicenter. The average sales price of a loft hit $1,390,597 in the first quarter, a 17% increase over the $1,188,134 for the first quarter of last year. The number of loft sales for the quarter was 277, up 15.4% from the first quarter of last year and more than 4.5 times the previous quarter’s sales.

The average price per square foot climbed 3.3% to $631 per square foot and the average loft size was up 20.9% to 2,204 square feet.

The Insignia Douglas Elliman Manhattan Market Overview, considered the most comprehensive ongoing analysis of the residential real estate market, tracks sales of coops and condos priced at $75,000 and up in apartment buildings between Battery Park City and West 116th Street or East 96th Street, based on data from management agents for coops and public record for condos.

It is prepared quarterly for Insignia Douglas Elliman by the independent appraisal firm of Miller Samuel Inc.

Insignia Douglas Elliman, a division of Insignia Financial Group, Inc., is the leading residential real estate brokerage firm in Manhattan. In addition to residential brokerage, Insignia Douglas Elliman’s services include sales and leasing of commercial, retail and healthcare properties. In 2001, Insignia Douglas Elliman achieved sales of $2.5 billion.

The firm has ten offices in New York City and, on Long Island, NY, in Locust Valley, Manhasset and Port Washington/Sands Point, as well as affiliated offices throughout the world.

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Published: April 23, 2002

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