Stribling releases luxury residential report.

Stribling & Associates recently released its annual Luxury Residential Real Estate Report for 1999. This report is the only review which focuses solely on transactions in the luxury segment of the New York City residential market. For reporting purposes, luxury properties are defined as those in excess of $3 million each. Kirk Henckels, senior vice president of Stribling & Associates and director of the firm's Private Brokerage division, prepared the report.

Elizabeth F. Stribling, president of Stribling & Associates, said, "Two themes emerge in the luxury segment of the New York City residential market in 1999. First, the rate of price increases of most luxury properties in the past ten or twelve years has only slightly exceeded the overall rate of inflation over the same period. Our analysis, then, concludes that the current prices (while historically high) are only somewhat higher than in 1988, when measured in inflation-adjusted constant dollars. Secondly, the buying power of potential purchasers of luxury properties has exploded. The driver of the luxury market today and in the foreseeable future is the fact that potential luxury purchasers are getting richer faster than prices are rising. Indeed, we are in a very healthy- market for luxury real estate. There are, therefore, an increasingly large number of financially qualified prospective purchasers for luxury properties. Asking prices conversely have risen less rapidly over the past decade than upper echel on salaries and professional compensation."

Henckels, discussing the details of the analysis of the current luxury property market, said, "The current market continues to be the strongest in decades. And, despite the common complaint about high prices, 'real prices' adjusted for the impact of inflation during the period have only just surpassed those of 1988 in early 1999. What people fall to consider is that the price increases for luxury properties and inflation have been roughly equivalent in the past decade, until early 1999."

He continued, "Inflation from 1988 to 1999 was approximately 44.4 percent. However, the $3 million and higher New York City residential property market has experienced somewhat higher appreciation over the period. Price increases vary widely depending on the unique nature of individual luxury properties and there are, isolated examples of non-adjusted individual property price appreciation as high as 160 percent, since 1988. The 1988 to 1999 property price increases, however, were not as great as the appreciation that occurred when the Consumer Price Index increased 82 percent between 1978 and 1988. This comparison suggests that, given the extremely high current demand for luxury housing, we have not reached the top of the market, a conclusion that is further supported when affordability is factored into the equation. The Dow Jones Industrial Average has increased approximately 440 percent since 1988 and, not surprisingly, the ratios of income to average luxury property price indicate much stronger affordability now than in 1988."

The overall observation of the Luxury Property Report for 1999 is that, for the reasons outlined above, there is exceptional current strength in luxury real estate across all categories - cooperatives, condominiums, townhouses and lofts. This conclusion is inevitable given the significant increase in pending sales over $3 million in all categories at year-end 1999, versus the end of 1998. This is evidence of a record level of consumer confidence in contrast to the stock market jitters prevalent in the fall of 1998.

Co-operatives

Luxury co-operatives experienced a 15 to 20 percent price increase last year. The average luxury (over $3 million) co-op sold for $5.2 million in 1999, up 17 percent.

During 1999 over 29 percent of luxury co op transactions were at or above the asking price.

There are currently 17 co-op apartments listed for sale at prices over $10 million, including one over $40 million.

Townhouses

The volume of luxury townhouse properties sold in 1999 jumped about 98 percent over 1998 and 192.6 percent above 1997, as sellers were attracted by high prices and speculators entered this market.

There were seven family townhouse sales over $10 million last year, up from only one in 1998, including one reported at $17.7 million.

On a per-square-foot basis, townhouses continue to be the best residential buy in New York City, with many properties trading at or below $1,000 per foot.

Condominiums

Nearly 100 percent of new-luxury residential construction for purchase, as opposed to rental, is in the condominium category. The major trend for condominiums is toward family-sized units.

In 1999 condominiums continued to be the most expensive segment of luxury residential housing, with the top properties selling at 2,000 to $3,000 per square-foot.

Price parity between the East Side and West Side was approached in condominium sales in 1999, extending the recent trend.

Downtown

The Downtown loft and townhouse markets continue to be red-hot, with many new development projects underway. The Stribling Luxury Report for 1999 details price trends and the active development market.

The highest sale during 1999 was $6.5 milion for a 6,000 square-foot penthouse in a loft cooperative sold to Rupert Murdoch, an example of the caliber of buyer now at attracted to the Downtown market.

There are more than 20 loft sales pending at prices above $3 million.