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In contrast to the housing woes seen in other U.S. markets, New York City’s residential prices keep going up. So say two quarterly reports on the city’s apartment market.

The average price paid for Manhattan apartments hit a new high of $1,690,995 in Q1 2008, up 47% compared to the same period one year ago, according to Brown Harris Stevens. The rise was due in large measure to the highest end of the market, including 15 Central Park West and the Plaza, which saw a 318% rise in the number of closings over $10 million, including four recorded closings over $30 million. The median figure also set a new record of $855,000 and was up 13% from Q1 2007.

However, those numbers can be read too simply, in the view of Jim Gricar, EVP and director of sales at Brown Harris Stevens. “In the report, we provide two numbers: with 15 Central Park West and the Plaza factored in and factored out. In fact, neither number, if you think about it, is entirely accurate because if you leave them in, it skews the average. Yet if you take them out, you’re pretending that they didn’t happen, but they clearly did happen and therefore are a reflection of the market. Instead of blending it or coming up with some methodology that we think is reflective of what actually happened, we let the reader decide.”

Do big-ticket items skew numerical averages? “They can, certainly,” Gricar says. “But one thing that is pretty clear is that there is activity in the market, although it seems to be dictated almost entirely by the amount of inventory in that category. In that hyper-luxury market, there are more buyers than there are properties and so that’s keeping the prices artificially high. The inventory of one- and two-bedroom apartments is more plentiful and the prices are a little softer as a result. Three-, four- and five-bedroom apartments are not plentiful, and in those categories, the prices are being held up. It’s the most simple supply-and-demand argument you can imagine, but so often with real estate, it really does boil down to fundamentals.”

Manhattan’s rising apartment prices brought the citywide average up 28% in Q1 ’08 compared to the same period last year, according to a new report from ResidentialNYC.com, a web portal managed by the Real Estate Board of New York. The ResidentialNYC.com report put Manhattan’s price increase at 41%, with the average at $1.6 million compared to $1.1 million in Q1 ‘07. In Brooklyn, average home prices were up 3% to $582,000, compared to $565,000 in Q1 ’07, according to the report.

The number of apartment sales throughout the city was down 5% in Q1 ’08 compared to a year earlier. Manhattan’s home sales overall were off by 6%, sales in the Bronx declined by 32% and Staten Island saw a 42% drop. Apartment sales in Queens increased by 2%, while Brooklyn saw an increase of 7%.

“As the market in some areas of the city has softened due to the slowing economy, we must consider where prices were five years ago before the recent market boom,” says REBNY president Steven Spinola in a news release. “The condominium market in particular has experienced tremendous growth. In the first quarter of 2003, for example, the average sale price for a condominium in Manhattan was $711,000, whereas today Manhattan condominium prices average an astounding $1,829,000.” Condominium sales were up over Q1 ’07 in Manhattan, Queens and Brooklyn, whereas sales of cooperative apartments were down in all five boroughs.

“Uncertain markets are actually good times for people who actually need to sell or buy,” Gricar says. “It’s not a great time for tire-kicking, because brokers are focused on buyers who are ready, willing and able. With sellers, it’s the same thing—the buyers are way ahead of them and can tell if they’re just testing to see what price they can get.”

Another thing that differentiates Manhattan from other markets is its sheer residential density, says Gricar. “Because the pool is so much larger, by definition we have more ‘need buyers’ than many other markets,” he says. “We’re not an investor market; we’re primarily a user market. And I think a normalizing market would be a lovely thing. We’ve been in the throes of a full-scale seller’s market for nearly 10 years.”

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