- Median closing prices in Manhattan increased from the first quarter of 2015 to the second quarter of 2016 by 35 percent.
- Historically low inventory, pent-up demand, low interest rates, higher quality and an increasing share of condos to the market are all fueling the price growth in Manhattan.
- Number of units and sales volume increased annually in the second quarter of 2016 over the same quarter last year.
The Manhattan real estate market kicked off the year with a strong foot forward, according to Compass’ recently released Q2 2016 Manhattan Market Report. Inventory and prices increased annually over last year by the end of the second quarter of 2016, and nearly all major markets and neigborhoods are progessing in the same direction, the report says.
In the second quarter of 2016, Manhattan’s median closing price was the highest reported on record, at $1.195 million. For the second quarter of the year, months of supply is rising and inventory has also increased. Overall, inventory grew 2 percent over the same time period last year.
Sales volume also increased year-over-year in the second quarter of 2016, from $31.05 billion to $33.03 billion. The biggest increases were reported in the $1 million-$3 million range, which upticked from 20.5 percent of sales volume in 2015 to 22.1 percent in 2016. The $10 million-$20 million price range also posted an increase to 17.1 percent from 16.1 percent.
As far as inventory, a big push came from the 9 percent increase in condos. This big uptick helped balance out from the 5 percent dip in co-op inventory in the second quarter of the year. There were a total of 5,477 condos for sale in Q2, with the largest year-over-year increase in the $1 million-$3 million bracket, at 20.3 percent. This sector also the largest market share at 43.9 percent of the market.
During the second quarter of the year, there were 3,238 closings — a dip of 6 percent. Condo closings in particular increased 10 percent and two brackets, including $3 million-$5 million and $5 million-$10 million, increased by more than 35 percent. This big surge was mostly fueled by new developments such as The Greenwich Lane, 10 Madison Square West and 56 Leonard.
In Manhattan, the median closing price was a 20 percent increase compared with a year ago. Downtown, Midtown and Upper West Side all saw significant increases in the overall median price.
The overall median price increased around 35 percent from the first quarter of 2015 to the second quarter of 2016 due to several different factors: Pent up demand from historically low inventory and historically low interest rates joined forces, making prices even higher. And with the historically low inventory comes a new wave of developments, which for the most part are higher quality developments with in-house amenities that come with a larger price tag. Lastly, the increasing share of condos in the overall for-sale market in Manhattan added fuel to the fire.