Recent articles from The Wall Street Journal (”Stunned Home Buyers Find the Bidding Wars Are Back”) and The New York Times (”The Sun Shines Again in Miami”) have been spot on in terms of the Manhattan and Miami Real Estate markets. Here are our observations of both markets:
Manhattan and Miami have seen significant price increases on a per square foot basis over the same prior-year quarter (Q1):
· Manhattan Condo prices increased 8%
· Manhattan Luxury prices increased 9%
· Miami Luxury prices increased 13%
· South Beach prices increased 20%
· Miami Beach prices increased 27%
· Downtown Miami prices increased 19%
Inventory has declined significantly, causing multiple bids on certain properties that have stunned buyers. At current sales rates, Miami has only 4 months of inventory and New York City has only 9 months of inventory.
While multiple bids are not happening across the board, many prime neighborhoods now have a shortage of inventory.
Mortgage lending standards remain tough for entry-level buyers; however, standards have loosened considerably for foreign buyers, as down payment requirements have been lowered by the big banks to 30% in Manhattan and 40% in Miami (although some smaller banks are offering 30%).
The very high end of the market has been surging, as cash rich buyers, who have been sitting on the sidelines for years, decided to get back into the market. Record prices have been seen for Manhattan Real Estate (a $88 million for a penthouse at 15 CPW and record prices, averaging $6,000 per sq. ft., at One 57, the new uber-luxury 90-story pre-construction development towering over Central Park) and Miami (a $20 million for a sale at St. Regis Bal Harbour, $21.5 million for a penthouse at Setai and $25 million for a new listing at Apogee).
In Manhattan, new development is scarce, with boutique new developments like Touraine, 130 West 12, and 422 W 20, selling out in a heartbeat. After the huge success of One 57, deep pocket buyers are anxiously waiting for trophy buildings like 432 Park Avenue, One Madison Park and 56 Leonard.
In Miami, new towers like, Icon Bay, The Mansions at Acqualina, Grove at Grand Bay, and Porsche Design Tower Miami, are being announced weekly. But, gone are the days of 10% down payment. Developers are requiring 50%-60% in progress payments over 2 years, with the remaining at closing – a practice borrowed from Brazil.