The luxury real estate market in Manhattan is still thriving, and the new mayor of New York will struggle to try to close the gap between the extremely wealthy and the rest of the inhabitants in the city. During the last three months of 2013 the median sales price of a condominium reached $855,000 according to two major broker,s while two other big real estate firms recorded the median price as reaching $841,000.
Both of these figures are significantly higher than the median price for a single-family home in the United States. According to figures from the National Association of Realtors, the medium price for such property reached $196,000 in November. The report in CNN Money.com points out that Manhattan real estate prices were the highest average sales prices recorded for the fourth quarter when sales are typically slower.
The most expensive properties saw the biggest price increases, with the top 10% seeing an increase of 10.4% year on year, selling for a median sales price of $4.9 million. These increases were helped by the number of new condo developments as almost all were luxury condos with starting prices of around $3 million.
Apparently developers are choosing to build luxury condos due to the high costs of land as this is the best way for them to make money. The people buying such expensive properties tend to work on Wall Street or are international buyers. Even though hiring in the financial sector is still slow, investment banks are still paying huge wages to employees. In 2012 the average bonus was $121,900, and these figures are expected to be even higher for last year. In addition numerous international buyers, particularly the Chinese, have been purchasing property in Manhattan as they regard it as being a safe haven for depositing their excess cash.
All these factors have combined to drive up property prices in just about every neighborhood in Manhattan. Even neighborhoods such as northern Manhattan and Harlem are seeing luxury condos spring up that are able to command high prices. These are sometimes in excess of $1.5 million for a two-bedroom apartment of less than 1200 ft.². Real estate experts point out that as the market continues to strengthen these high prices will spread to the outer boroughs, especially to those with easy access to Manhattan.
It’s anticipated price growth for this year will be more modest as much of the demand was met by record sales recorded last year and is likely to be further moderated by increasing mortgage rates.