Manhattan apartment prices dropped in the first quarter as new buyers seeking refuge from rising rents drove purchases of lower-cost studios and one-bedroom units to a two-year high.
The median price of all condominiums and co-ops that changed hands in the three months ended March 31 fell 0.9 percent from a year earlier to $775,000, New York appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said in a report today. Deals totaled 2,311, down 3.5 percent from the first quarter of 2011.
Studios and one-bedrooms accounted for 56 percent of sales completed in the quarter, the highest share since the last three months of 2009, when first-time purchasers qualified for a federal tax credit of as much as $8,000, according to Jonathan Miller, president of Miller Samuel. The smaller units, favored by entry-level buyers, accounted for 49 percent of all transactions a year earlier.
“Because the rental market is so hot, people are realizing that maybe buying a starter home is a better option, especially if they can take advantage of these low interest rates,” said Sofia Song, vice president of research at property-listings service StreetEasy.com, which also released a report on the Manhattan sales market today.
Among pending sales — contracts signed but not completed in the first quarter — studio deals climbed 19 percent from a year earlier, according to StreetEasy. Buyers agreed to purchase 12 percent more one-bedroom units than in the first three months of 2011.
Rents Approach Peak
The median effective rent for Manhattan apartments, or what tenants paid after landlord-sponsored incentives, rose 9.5 percent in the fourth quarter from a year earlier to $3,121 a month, according to Miller Samuel and Prudential. Rents averaged $3,376 in February, $18 less than the market peak in May 1997, data from New York brokerage Citi Habitats show.
The average interest rate for a 30-year fixed U.S. home loan fell to 3.87 percent in February, the lowest in Freddie Mac records dating to 1971. The rate was 4 percent or lower for all but one week in the first quarter, according to the McLean, Virginia-based mortgage financier.
For Katharine Tuckerman, a message from her landlord pushed her into homeownership: The rent for the Midtown apartment she had leased since 2009 would be raised “significantly” come June. Tuckerman decided that it might be time to buy.
“I’ve seen everything that was out there for rent and none were as nice as if I had just bought something,” she said.
Cheaper Than Leasing
Tuckerman, 28, a sales associate at brokerage Brown Harris Stevens, set out to find a building with low maintenance fees so that her entire monthly burden would be no more than $2,500. She considered three options before choosing an 800-square-foot (74- square-meter) co-op on East 66th Street. She put down 50 percent of the $575,000 purchase price and borrowed the rest at a rate of less than 4 percent. After a gut-renovation of the kitchen and bathroom, she plans to move in this week.
Her monthly payments, including mortgage and maintenance, are $2,200 — “less than I would have to pay for a rental the same size, for sure,” she said.
Other reports issued today on the Manhattan apartment market showed mixed results for sales and values in the first quarter. Corcoran Group said purchases of condos and co-ops totaled 2,700 deals, little changed from a year earlier. The median price climbed 1 percent to $809,000.
StreetEasy said the median price was unchanged at $775,000, while completed deals climbed 9.4 percent to 2,969.
Brown Harris Stevens and its sister brokerage, Halstead Property LLC, both reported a median price of $821,500, up 4 percent from the first quarter of 2011. The gain was spurred by an increase in sales of properties priced higher than $10 million, said Gregory Heym, chief economist at Terra Holdings LLC, which owns the two firms. There were 17 deals in that range, up from 12 a year earlier, according to Brown Harris and Halstead.
Purchases of luxury apartments, defined as the top 10 percent of all sales by price, declined 3.3 percent to 231 deals, Miller Samuel and Prudential said. The median price of those transactions climbed 4.4 percent to $4.13 million.
On the Upper East Side, the median price of previously owned co-ops climbed 7 percent to $890,000 from a year earlier, according to Corcoran. Condo prices in the neighborhood declined 17 percent to a median $1.06 million. On the Upper West Side, the median price of co-op resales dropped 4 percent to $669,000, while condo resale prices climbed 28 percent to $1.23 million.