Condos Ascendant! But What Price Victory?

Condo sales accounted for 56 percent of the housing deals closed in Manhattan in the first quarter of 2008. That's a striking percentage given recent history and the borough's housing stock.

Co-ops usually outnumber condo sales, though the two types of housing have gained a bit of sales parity in recent years. In the fourth quarter of 2007, for instance, condos accounted for 49 percent of the apartment deals and co-ops 51 percent, according to appraisal firm Miller Samuel. In the quarter before that, condos accounted for 48 percent. In 2006, condos accounted for over 49 percent of all deals.

Such percentages come despite condos representing maybe 25 percent of the for-sale housing stock in Manhattan. The rest are co-ops (or townhouses).

Yet, now, condos have pulled well ahead of co-ops. Why? Any number of reasons but two probably matter more than most: new-condo development and co-op boards.

Condos are easier to buy because of the lack of co-op boards; and condos generally require a lower downpayment than co-ops. Also, there are more condos than ever in the history of Manhattan to choose from. The pace of condo construction has been absurdly high as of late when compared to co-ops. Case in point: In 2005, the state attorney general's office approved offering plans for new Manhattan condos totaling more than 9,000 units. That same year 374 co-op units won approval.

Of course, all is not rosy for condos in their Manhattan ascendancy. Condos cost a lot more on average than co-ops; Miller Samuel reported that condos averaged a sales price of $1,981,802 in the first quarter compared to an average co-op price of $1,393,548.

And! The inventory of unsold Manhattan condos on the sales market has risen steadily since early 2007--it was at 3,325 by the end of March, an 11.1 percent increase from the first three months of 2007.