For the Super Rich, the Boom Years Have Just Begun

Wow. The Manhattan luxury market scaled fresh heights in the first quarter of 2008, with the average luxury apartment price blasting to a record of over $7.66 million and the median price reaching nearly $5 million, another record. At the top of the market, no matter the uncertainties below—or west of the Hudson—luxury Manhattan continues to amaze.

The average sales price of a luxury apartment here increased 33.5 percent from the fourth quarter of 2007 and 65.2 percent from the first quarter a year earlier, according to numbers released on Tuesday by appraisal firm Miller Samuel and brokerage Prudential Douglas Elliman. The median price was up 16 percent quarterly and 45.7 percent annually. (Miller Samuel defines luxury as the top 10 percent of deals in a quarter.)

Some perspective: In 2001, the median sales price for a luxury apartment was $2.8 million. That median has increased nearly 80 percent. More perspective: At the peak of the national housing boom, in the first quarter of 2006, the average luxury sales price per square foot in Manhattan was $1,544. That average has increased over 65 percent to a record $2,556.

And on and on. Record, record, record! The Manhattan luxury market has defied odds and exegesis.

The explanations fall by the wayside. Foreign money? Perhaps; but foreigners make up maybe one-third of all new-construction buyers, and that’s not enough to truly tilt the market significantly one way or the other. Cheaper financing? Luxury buyers aren’t nail-biting over mortgage rates like most people. Wall Street? The Street’s had a bad stretch going back to at least the autumn months.

Perhaps it’s just money and demand—Economics 101. But how long till class let’s out? Luxury sales were down nearly 10 percent quarterly and over 34 percent annually in the first quarter, according to Miller Samuel. The number of days it takes to sell a luxury apartment increased on average 15.4 percent from the fourth quarter, to 135; and the inventory of unsold luxury apartments was up 8.8 percent quarterly.

Still, the leaps in luxury prices were truly stunning. The Miller Samuel analysis at one point took out all those mega-deals at the Plaza and 15 Central Park West, and prices still, in all levels of the market, either set records or came close. Put away the pessimism until the next time: The power of it all remains able to amaze.