Condo demand is surging in the Big Apple. Prices of high-end condos are soaring to new records, and developers simply can’t build them fast enough to meet demand.
Real estate in New York City has been expensive for centuries, but experts say foreign demand for top quality NYC real estate has never been higher, and the buying frenzy shows no signs of slowing down in the near future.
A tale of two markets
Recent sales statistics just reinforce the fact that New York residential real estate is becoming a tale of two markets—the high-flying condo market and the nose-diving co-op market.
Price for condos increased by 13% to an average price of $2,115,228 in 2013, and total sales were up by 23%.
Co-ops, which once represented wealth and exclusivity in the Big Apple, are simply not in as great demand. In fact, co-op prices are actually declining, with the average price for co-ops dropping by 1.6% in the fourth quarter to $1,171,552.
Condo frenzy not ending soon
Most New York City real estate analysts do not view the current situation as a real estate “bubble”, but a genuine demand versus supply-driven price increase. Most say prices will continue to go up at least through 2014. “I think we’re on a path for strong and sustainable growth this year as well,” said Dottie Herman, president and CEO of Douglas Elliman.
The average sales price for a Manhattan residential property increased by 5.3% to $1,538,203 in the fourth quarter compared to 4Q 2012. The median sales price for condos in 4Q 2013 is the highest ever tracked, surpassing $1.3 million.
Foreign buyers driving demand
Analysts also point to foreign buyers looking for long-term investments as the primary factor behind soaring NYC condo prices. They also highlight that these buyers are only interested in modern, multi-amenity condos and not more traditional townhomes. “The international buyer is only looking at the condo market,” said Jonathan Miller, president and CEO of Miller Samuel.
The increasing demand from the super-wealthy has led to new condos in Manhattan becoming larger than they’ve ever been before. The average condo currently under construction is 1,697 square feet, more than 23 percent larger than the average square footage last year.
“The product being built is substantially larger than anything we’ve seen in prior booms,” Miller elaborated.