Tuesday, November 3, 2015, by Amy Plitt with Curbed NY
Despite the proliferation of new buildings and luxury condos throughout Manhattan, a new report by Crain’s reveals that the number of rental units on the island is astronomically higher than the number of units for sale. That’s not hyperbole: According to Crain’s, in Q1 of 2015, there were 850,000 apartments in Manhattan, but only 5,200—or 0.6 percent—were for sale; plus, 75 percent of the borough’s apartments are rental units. The piece breaks down why this is happening, and—spoiler!—the plethora of ultra-pricey apartments is playing a part in why inventory is so low, and prices are so high.
Because so few apartments are for sale at any given time, developers and landlords can charge a pretty penny for them—it’s that old rule of demand outpacing supply. The median sale price for a Manhattan apartment is close to topping $1 million, and it’s unlikely that it’ll go down anytime soon. But part of the problem is that it’s so expensive to build in Manhattan—from securing air rights to getting the materials to hiring construction crews—that it’s become difficult for developers to turn a profit. (“In 2014, the average cost of building an apartment was $585,370, three times what it was just seven years prior,” according to Crain’s.) That’s how the firms behind buildings like One57, 432 Park Avenue, or Central Park Tower are able to command such high prices—and they have the ultra-rich buyers who will shell out up to $100 million for an apartment.
But where does that leave those New Yorkers whose budgets are more modest? Sadly, they’re pretty much screwed: Even with Mayor de Blasio’s affordable housing push—which includes both sale and rental units—the number of cheaper apartments on the market isn’t likely to change anytime soon. And “the days of landlords converting waves of rental units into co-ops or condos have long passed,” according to Crain’s. Better start looking in the outer boroughs if you hope to buy in the city anytime soon—or stick with renting. (Not that it’s so simple to do that, especially when rental prices in Manhattan are rising fasterthan ever before.)
· Why are so few apartments for sale in Manhattan?