What real estate crash? Manhattan apartments now average $2 million

Buying an average apartment in America’s financial capital will now set you back a record $2 million. And reports of a real estate crash in New York are greatly exaggerated, according to one of that market’s most-followed statisticians.

Data released Friday by appraisers Miller Samuel in conjunction with brokers Douglas Elliman shows that the average sales price for a place in Manhattan in the fourth quarter of 2015 was $2,051,321. That represents an 18% increase from last year. However, the median sale price was merely $1,137,500.

The discrepancy between average and median can be explained by Manhattan’s astronomical luxury market, where the threshold price for the top tenth came in at $4.45 million. That’s more than $1 million higher than last year. The average sale price of the top 10% was nearly $8.3 million.

But the frenzy of activity above $5 million appears to be tapering off, said Jonathan Miller, president and CEO of Miller Samuel. Nonetheless, he warns against interpreting the slowdown in the upper crust of the market as a sign of an impending real estate market collapse.

“When you look at the way people interpret what's happening in Manhattan, they see it through the eyes of what a $100 million apartment is — when in fact that's more of a circus sideshow,” said Miller.

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He notes that half of Manhattan’s transactions sold at or above asking price in the most recent quarter. He adds that sales between $1 million and $5 million are moving at a brisk pace, something he expects to continue.

Miller also rejects the thesis that Manhattan’s two-comma real estate prices were being fueled solely by foreign money and are now jeopardized by global uncertainty and a stronger dollar versus emerging market currencies.

“The foreign buyer contribution to the market is wildly overhyped,” he said. “It's certainly significant, for example, if you look at midtown Manhattan — ‘Billionaires’ Row’ — [where] international demand dominates that market. But for the balance of Manhattan, especially downtown, it might be 10% or 15% of the activity. So it really is location specific and it is not significant. ... Domestic demand has been very strong.”

Miami is another city with a lot of foreign investment. And like New York, Miami’s highest end is seeing somewhat of a slowdown while the rest of the market continues to move.

“What we’re seeing is a very vibrant, strong market,” said Miller. “But as you skew towards the luxury or top of the market, we have a lot of product meeting a very narrow bandwidth of demand.”

Transactions in Miami have fallen some 20% from last year but Miller sees that as a positive sign. “Distress real estate, something that Miami used to be known for before it rebranded itself towards luxury, are evaporating from Miami,” he said.

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