In 2015, a confluence of micro-market trends led to one of Manhattan’s most successful – and competitive – real estate years on record. My team and I have been digging through the numbers to better understand how 2015’s trends will impact sales in 2016.

Average Sales Prices Up 12% in 2015, Re-Sale Up 15%, Lofts Up 13%

Overall, average sales prices increased by 12 percent. New developments and re-sale prices increased 8 and 15 percent respectively, according to Jonathan Miller’s quarterly report. Average price-per-square-foot skyrocketed 28 percent over 2014. Median prices rose a strong 15 percent, thanks to multiple new luxury development units closing during Q4 2015 that went to contract during 2013 and 2014.

Co-op sales volume hit a new low as a result of limited marketplace inventory. As prices continue to skyrocket, current homeowners who don’t have an immediate need or the financial ability to upgrade are staying put, reducing available inventory. Consequently, buyers are increasingly having to choose between current new developments and condo re-sales constructed between 2000 and 2010, especially in the $2 Million-plus market downtown where current owners can cash out and re-invest in the latest developments.

In the loft market, sales volume dropped by 50 percent over 2015 as current residents stayed put. The extremely tight market drove loft prices up by 13 percent while dropping days on the market by 30+ percent.

Overall averages tell only part of the story for Manhattan’s micro-markets. While overall sales averaged $1,750 per square foot, for the co-op market, sales averaged closer to $1,000 per square foot, with a median sale price of $750,000.

Historically, Manhattan inventory supply was created for the entry level market of Studios and 1 to 2-bedrooms. in 2015, studios and one-bedrooms accounted for 63 percent of all coop sales volume! Luxury homes accounted for only 12.5 percent, and 4+ bedrooms represent just 2 percent of all co-op sales with a median price of $5.5M.

In contrast, the condo market saw an average price of $1,960 per square foot. Studios and one-bedrooms accounted for 40 percent of sales and 3-4+ bedrooms represented 23.3 percent, showing the trend from 2010 forward for developers to cater to the high end buyers who are growing out of their existing homes wish to remain in New York or buy a trophy property. Four-bedroom condos had a median sales price of $6.7 million.

In the luxury marketplace, co-ops represented 51 percent of luxury sales with a median price of $4.1 million versus condos that had a median price of $9.6 million. Luxury co-ops are definitely providing value-opportunity for buyers who are comfortable with the co-op Board review process.

New Development Sales Pushing Up Manhattan Co-op Prices

The higher sales prices we’re seeing for new developments is also having a ripple effect on the Manhattan co-op market. As price averages are drawn upwards and new price per square foot ceilings are broken in the new development condo market, sellers of re-sale coops are able to raise their prices further given new benchmarks being set overall and relatively scarce supply. For higher-end coops however, pricing correctly is still important as buyers are showing a favoritism towards newer product with less intrusive Boards than what was traditionally acceptable to buyers historically given lower higher-end condo supply 15 years ago. With the top-top of the market seeing a rise in inventory, grand co-ops still hold a place in buyers’ minds, but sellers today need to be cognizant that the market dynamics today provide the 1% buyer with a larger range of inventory and design options and they need to have their brokers create strategic marketing and price with that in mind.

We will continue to monitor the market as we move forward in 2016 and share it here on the blog.