April 4, 2006

Wall Street bonuses lift Manhattan apartment prices

By Ilaina Jonas

NEW YORK -- Flush with higher bonuses, Wall Street bankers and traders helped boost the average price of a Manhattan apartment by 7.1 percent in the first quarter, according to a closely watched report released on Tuesday.

But Manhattan's residential real estate market showed signs of cooling, as the number of unsold homes reached its highest level since 1999.

The average price of a Manhattan apartment rose to $1,300,928 from $1,214,379 a year earlier, and up 9.6 percent from the fourth quarter, according to the Prudential Douglas Elliman Manhattan Market Overview.

Overall sales dipped 1.1 percent from a year earlier, but rose 27.4 percent from the fourth quarter as more people spent their holiday bonuses. Condominium closings surged 47.8 percent.

"Two-, three-, and four-bedrooms all gained market share at the expense of entry-level apartments," said Jonathan Miller, the author of the report and president of the real estate appraisal and consultant firm Miller Samuel Inc. "This is attributed to Wall Street bonus money that flowed through."

New York State Comptroller Alan Hevesi has estimated that Wall Street bonuses last year rose 15.5 percent to a record $21.5 billion.

The average price per square foot rose 10.3 percent to a record $1,004 from $910 from a year earlier, but was little changed from the fourth quarter's $1,002.

The median sales price -- in which half the homes were higher priced and half were lower -- was $825,000, up 17 percent from a year earlier and 8.6 percent from the fourth prior quarter.

The number of homes on the market jumped 59.6 percent to 6,904 from last year's 4,327, and 15.8 percent above the prior quarter's 5,964.

Miller attributed this to relative softness at the lower end of the market, where the impact of rising mortgage rates was more evident.

The average rate on a 30-year fixed mortgage rose to 6.36 percent from 6.08 percent a year earlier, according to the Mortgage Bankers Association.

"Manhattan, although we like to think of ourselves as different from the rest of the country, in so many ways we're very similar," he said. "And the similarities are with rising inventories."

The number of days it takes to sell an apartment fell 44 days from a year earlier to 138 days, and was just one day longer than in the fourth quarter.

For the first time in nearly five years, there were more condominium sales than co-op sales.

In condominiums, people own their apartments directly. In co-ops, which are particularly popular in the New York area, people own shares in a corporation, which give them the right to occupy their apartments.

Much of the expanded inventory came from new condominiums hitting the market, Miller said.

Some 2,933 condominium units, mostly new, were on the market at the end of the first quarter, up 390 from the end of 2005.