Guests attend a pool party in the penthouse apartment at the 50 United Nations Plaza building in New York.
Michael Nagle | Bloomberg | Getty Images
A shortage of luxury apartments in Manhattan is driving up prices in the top-tier market segment, despite a slowdown in overall apartment sales and prices due to increasing mortgage rates.
The third quarter data from Douglas Elliman and Miller Samuel reveals a 23% decrease in Manhattan apartment sales, as rising interest rates put pressure on potential buyers. Median and average sales prices have remained steady, with the average price of a Manhattan apartment at $1.96 million and the median price at $1.15 million.
While the broader market struggles, the high-end segment has seen a significant decrease in supply and stronger prices.
Miller Samuel reports a 24% drop in the supply of luxury apartments, defined as the top 10% of the market by price, compared to pre-pandemic levels. This marks the lowest third-quarter inventory of luxury apartments in five years.
CEO of Miller Samuel, Jonathan Miller, explains that high-end buyers are typically less affected by mortgage rates as they often pay in cash. Consequently, wealthy buyers have persisted in making purchases and capitalizing on more favorable prices.
The luxury condo towers built during the pandemic have been the primary catalyst for high-end sales. However, most of these new, high-priced condos have been sold, and few new projects are being launched due to limited bank lending.
“A lot of the new development inventory was sold during the pandemic boom,” Miller said. “The high-end market is now experiencing fewer sales from new developments.”
With fewer luxury condo towers under construction, experts predict that prices at the high end will continue to rise or remain robust.
In the third quarter, there were nine Manhattan apartment sales priced at $20 million or more, compared to just two in the same period last year, according to Serhant.
The past four quarters have seen an increase in median prices for luxury apartments, as stated by Miller Samuel. Conversely, overall median prices in Manhattan have declined for four consecutive quarters.
“The higher end of the market clearly demonstrates more strength than the overall market,” Miller commented.
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