Residential sales market turns around

Real Estate Weekly, June 26, 1996 by Adrienne Albert

The increased sales volume of different types of homes can also be described as a chain reaction. After years of sluggish sales, the supply of co-ops is finally beginning to be absorbed, and prices are on the rise. This good news for co-op owners stems in part from the decreasing supply of condominiums, which has prompted many prospective buyers to turn to co-ops. Last year, total sales for condominiums decreased by 12.6 percent, while co-op sales in Manhattan actually increased by 12.9 percent.

In spite of all of this uplifting news, recent sales figures indicate that the chain reaction is slowing. Most likely, this is not because the demand for housing is diminishing, but because the market lacks the ingredients necessary to keep the reaction going. A case in point is the condominium market. In general, the number of condominium sales throughout Manhattan in the past six months has dropped somewhat; where sales have increased, it has been insignificantly. Again, this is probably not because of a lack of interest in the market; more likely, it is a result of the shrinking supply of available product.

Which brings me to my next point. Development, development, development. After years of virtually no new development, now it's beginning to happen - but slowly. There's no denying that the market is ready for it. The stumbling block is that developable sites in Manhattan are scarce. With the exception of a handful of new residential properties being built uptown, the opportunities (and the tax abatements) are Downtown. All over the Financial District, plans are being drafted to convert dinosaur office buildings of a by gone era into new housing. The first few projects are slated to break ground this summer.

As people wait for new housing and demand continues to grow, prices throughout the city are rising higher and higher. For instance, the Upper East Side continues to lead in terms of average price per square foot. Upper West Side three-bedroom units cost about 25 percent less than three-bedrooms on the Upper East Side. However, last year, two-bedroom units on the Upper West Side averaged higher dollars per square foot than those on the Upper East Side, primarily because of new product offerings available to purchasers. In addition, the average price of four bedroom homes increased significantly. Clearly Manhattanites want more space. Prices on these large units are expected to remain high through at least 1997, because of limited supply.

Considering the above facts and figures, I can say without a doubt that Manhattan's residential market is back, and it is better than it has been in many years.

ADRIENNE ALBERT President The Marketing Directors, Inc.