One of the best real estate deals ever made went down in May of 1626, when Dutch West Indies trader Peter Minuit bought the island of Manhattan from the local Lenape indian tribe for 60 guilders worth of iron kettles, axes, hoes, small musical instruments and drilling awls (enabling the chief to boost the manufacture of wampum, the shell-beads which were the local currency). While it’s hard to estimate precisely, the 60 guilders worth of goods paid for the entirety of Manhattan real estate would probably be worth no more than a few hundred dollars today.
The original purchase price for Manhattan Island is so small its almost ironic to talk about Manhattan real estate prices in 2015, where the average price for an apartment on the island today is just a hair under $2 million.
Manhattan real estate prices skyrocketing
Based on data from New York real estate firm Douglas Elliman, real estate sales in Manhattan were up 9% in the fourth quarter of last year compared to fourth quarter 2014. The average sales price, however, leaped 12% in 2015, with the median sales price topping a record $1.15 million and the price per square foot blowing out at a record $1,645.
Real estate analysts and local Big Apple agents highlight that Manhattan real estate remains in great demand from buyers across the globe who are looking for relative safety from weak financial markets that seem fixated on the ongoing slowdown in China.
Market for co-ops in Manhattan is notably slower
The Manhattan condo market is on a tear fueled by foreign buyers, with average sales prices up by a quarter over the last 12 months to $2.66 million, and the price per square foot up 26% to $1,959. For just highly in-demand new construction, the average sales price topped a mind-boggling $3.29 million or $2,210 a square foot.
However, the co-op market in Manhattan is nowhere near as white hot. Co-ops on the island have only sold for an average of $1.28 million or $936 per square foot.
Of note, condos represent just under 20% of the residential real estate market in Manhattan today, but they could be set to could double over the next 18 months if current trends continue. Keep in mind that 5,500 new condo units were built in 2015 and at least that number of new condos is also projected in 2016.