Sales of condominiums and co-ops jumped 27% from a year earlier to 3,297, the highest fourth-quarter total in 25 years of record keeping, according to a report today from appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. The previous record was set in 2012, when sellers sought to finish deals before an expected jump in capital-gains taxes.
Buyers are rushing into Manhattans market after a jump in mortgage rates since May, heightening competition for properties at a time when supply is dwindling. The inventory of homes for sale at the end of December fell 12% from a year earlier to 4,164, the lowest since Miller Samuel began tracking that data 14 years ago. Demand is pushing values higher, with the median price for a condo reaching a record.
Theres a concern that homeownership will be more expensive and therefore the time to act apparently is now, Jonathan Miller, president of New York-based Miller Samuel, said in an interview. Its a combination of rising mortgage rates and concern that prices are going to rise.
The average rate for a 30-year fixed mortgage jumped from a near-record low of 3.35% in May to 4.53% this week, according to Freddie Mac. The Federal Reserve said last month that it would begin to scale back its stimulus plan that has kept borrowing costs low, fueling speculation that mortgage rates will rise further.
The median price of Manhattan transactions that closed in the fourth quarter climbed 2.1% to $855,000, Miller Samuel and Douglas Elliman said. The average price per square foot climbed 8.7% to $1,178. Buyers agreed to pay the asking price or more in 43% of all sales, compared with 12% a year ago.
Condo prices rose 14% to a record $1.32 million in the quarter. The surge was propelled by a 27% increase in the price of apartments in newly constructed developments, to $1.73 million. Properties built and completed since the recession tend to have larger units and are tailored to luxury buyers, which accounts for some of the price jump, Miller said.
I dont see demand going away, said Gregory Heym, chief economist at Terra Holdings LLC, owner of brokerages Brown Harris Stevens and Halstead Property.
He expects that inventory could decline further in 2014 while prices continue to rise. Homeowners are hesitant to list their apartments for fear they will have nothing to buy once they sell, while limited new development activity is focused on high-net-worth buyers, he said.
Theres no relief coming, Heym said. Youre seeing new developments being sold before theyre finished, and theres no reason to expect people will put their apartments on the market. The frustration is finding something to trade up to.
Other reports issued today showed a frenzy of sales and record-setting prices for condos. Brown Harris and Halstead reported 2,664 completed deals in the fourth quarter, a 16% increase from 2012.
Their report showed condo prices set a record of $2.16 million on average, after rising 15% from a year earlier. The average price for units in new buildings climbed even higher to $2.89 million, Halstead and Brown Harris said.
StreetEasy.com, a property-listings website owned by Zillow Inc., said the median new-development price rose 76% to $2.18 million.
Brokerage Corcoran Group reported an 11% surge in completed deals from the previous year to 4,113 sales. The number of contracts signed climbed 10% to 3,127. The median price of all properties that changed hands in the quarter rose 1% to $855,000, while values in new developments jumped 32% to $1.68 million.