3Q15 Manhattan Prices Rise Driven by Continued Contraction in Supply

Town has published our quarterly Aggregate Manhattan Market Report. The data show that the pace of price increases slowed on average in the third quarter to +1.5% year-over-year given fewer closings and lower average prices for larger, luxury apartments in all neighborhoods below 110th Street.

We continue to view that the median price is a better measure of market health. This measure showed continued robust growth, up 7.6% year-over-year driven by price increases for studio, one and two bedroom apartments across Manhattan. Upper Manhattan saw the strongest price appreciation, as neighborhood improvement continues to drive strong demand.

Shortage of inventory, especially in the lower price points, continued to drive days on market down from 48 days in the second quarter to 41 days in the third quarter – a nearly 15% decrease. This remains a troubling trend for market balance, and continues to prevent qualified buyers from taking advantage of low rates to get on or move up the property ladder.

Fall listings and new development trends indicate that inventory trends will continue into the fourth quarter. Coupled with continued strength in foreign investment and low interest rates, we expect that median price growth will remain strong in the coming quarters. In light of this market environment, there are opportunities for sellers and buyers, but there are still fewer of these than demand trends support.