Salient to Investors:

Miller Samuel said:

  • Listings for NY non-luxury apartments – homes under $3 million and 90 percent of the market – have fallen by over 36 percent year-over-year in each of the last 3 quarters, the biggest declines in 12 years of record keeping.
  • Inventory in the top 10 percent of the market by price fell only 3.9 percent in Q2 2013 from a year earlier.
  • The absorption rate was 3.9 months, the fastest in records dating back to 2004.
  • The average price of a non-luxury Manhattan apartment climbed 7.8 percent in Q2 from a year earlier to $1 million, while the average price for a unit in the top 10 percent of the market fell 8.4 percent to $5.25 million.

Sofia Song at StreetEasy said the people looking to buy now were the people waiting for the last boom cycle to burst.

New supply is not growing fast enough because developers are almost exclusively building luxury units. Rachel Gilbert Solomon at Atalanta Advisors said everything being built has to be considered luxury to succeed because developers are paying $750 a square foot for development sites, while construction costs raise the price to as much as $1,700 a square foot, versus $400 to $450 a square foot for land in the last boom. Solomon said builders are counting on selling units for an average of $2,400 a square foot to make the returns worth the risk.

There were 364 newly built units under $1 million for sale in Q@ versus 1,102 in 2008.

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