Watch CBSN Live

Bright Lights, Big Wallet

The average price of a Manhattan apartment rose to more than $1.14 million in the fourth quarter of last year, up 5 percent compared to the same period the year before, according to two new real estate reports.

The median price for the apartments was $760,000, a new record, beating the figure from 2005 by 9 percent, said the reports released Wednesday. The median value is the middle price, at which half the sales are higher and half are lower.

The median price is also an important indicator of a market's stability, said Greg Heym, who authored the reports for two Manhattan real estate firms, Brown Harris Stevens and Halstead Property. Heym is the chief economist for Terra Holdings, which owns both firms.

Heym, who also serves on the city's Economic Advisory Panel, said Manhattan is experiencing a more balanced market, meaning that price increases have become more sustainable - unlike in 2004, when double-digit gains were common.

The reports also reflect the New York market's resilience in the face of a nationwide housing slump.

One of the biggest price surges in Manhattan took place on the Upper West Side, where four-bedroom and larger apartments cost an average of $5.7 million, or a 48 percent increase over the fourth quarter from 2005.

An average price of an apartment with three or more bedrooms on the Upper East Side was about $3.8 million, up 22 percent.

The average price per square foot in Manhattan rose to $1,050, topping $979 in the fourth quarter a year ago and setting a new high.

"The market for luxury apartments in Manhattan remains very strong, and we're continuing to see steady growth in this sector," said Hall F. Willkie, president of Brown Harris Stevens.

The average sale price of new condos remained relatively flat at $1.3 million, about $13,000 less compared to the same quarter in 2005. Cooperative apartments in Manhattan saw their average sale price spike 3 percent to reach $953,120.

The Halstead report showed apartments sold during the fourth quarter of 2006 spent an average of 97 days on the market, 15 percent longer than during the same period a year earlier. Sellers received 97.9 percent of their asking price, down from 99.1 percent.

Heym said he doesn't see prices softening going into 2007 thanks to solid job growth in the city, a healthy economy and low interest rates. All of those factors, he said, are driving the market.

"It looks like demand will remain pretty strong," he said.

Heym added that record Wall Street bonuses, expected to top nearly $24 billion, also should buoy the housing market across the board.

Both reports were based on 2,364 reported sales.

View CBS News In