Here’s the good news, for buyers anyway: Manhattan apartment prices have declined in some of the toniest neighborhoods in one of the most expensive cities in America.
Here’s the bad news: You probably still can’t afford to buy them, even if you wanted to fork over a half-million bucks for a place so small that your couch and your bed would have to be the same piece of furniture.
According to a survey by New York City’s luxury real estate brokerage firm Brown Harris Stevens on the state of the Manhattan real estate market in the first quarter of 2013, the average apartment closing price dropped significantly from the last quarter of 2012 -- from nearly $1.5 million to just over $1.2 million. The median price has also dropped, from nearly $900,000 in the third quarter of last year to about $780,000.
The reason can be summed up in the following phrase: the capital gains tax hike.
“While the average apartment price fell 16 percent over the past year in Manhattan, the decline was due to the rush of high-end closings that occurred at the end of 2012,” the report said. “Many of the luxury sales that would have happened in 2013’s first quarter closed in the fourth quarter of 2012 as sellers took advantage of lower capital gains tax rates.”
The capital gains tax rate -- the levy on earnings from investments, such as real estate, went up to 20 percent from 15 percent. In order to save those 5 percentage points, apartment sellers were eager to unload before Dec. 31.
Apartment prices in different parts of Manhattan (as seen in the chart above) suggest a downturn in prices for both the smallest and largest apartments in the cherished Upper West Side. Families searching the upper part of the island for roomier accommodation have elevated prices for larger spaces there -- but a million bucks still buys you what three million gets you downtown.
The young and unencumbered have raised prices for tiny studio apartments in both downtown and the Upper East Side, while $200,000 can still get you a studio apartment in Upper Manhattan -- that is to say: a tiny, sunless box in which to live, far, far above Harlem.