(Bloomberg) -- 4/3/2012 -- Manhattan apartment prices dropped in the first quarter as new buyers seeking refuge from rising rents drove purchases of lower-cost studios and one-bedroom units to a two-year high.
The median price of all condominiums and co-ops that changed hands in the three months ended March 31 fell 0.9 percent from a year earlier to $775,000, New York appraiserMiller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said in a report today. Deals totaled 2,311, down 3.5 percent from the first quarter of 2011.
Studios and one-bedrooms accounted for 56 percent of sales completed in the quarter, the highest share since the last three months of 2009, when first-time purchasers qualified for a federal tax credit of as much as $8,000, according to Jonathan Miller, president of Miller Samuel. The smaller units, favored by entry-level buyers, accounted for 49 percent of all transactions a year earlier.
“Because the rental market is so hot, people are realizing that maybe buying a starter home is a better option, especially if they can take advantage of these low interest rates,” said Sofia Song, vice president of research at property-listings service StreetEasy.com, which also released a report on the Manhattan sales market today.
Among pending sales -- contracts signed but not completed in the first quarter -- studio deals climbed 19 percent from a year earlier, according to StreetEasy. Buyers agreed to purchase 12 percent more one-bedroom units than in the first three months of 2011.
Rents Approach Peak
The median effective rent for Manhattan apartments, or what tenants paid after landlord-sponsored incentives, rose 9.5 percent in the fourth quarter from a year earlier to $3,121 a month, according to Miller Samuel and Prudential. Rents averaged $3,376 in February, $18 less than the market peak in May 1997, data from New York brokerage Citi Habitats show.
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