You would think a $1 million would buy you a decent apartment in a nice neighborhood of New York City.
Maybe last year, but not anymore.
New York City is experiencing a shortage of nonluxury apartments, or units priced under $3 million, according to Businessweek. These nonluxury spaces have previously accounted for 90% of housing inventory in the city, but have plummeted by more than one-third in the last three quarters.
In contrast, the inventory of luxury apartments (the top 10% of the market) fell only 3.9%.
“For the bulk of the market, the 90 percent, it’s probably the most challenging period for a buyer in the 25-plus years that I’ve been observing the market,” Jonathan Miller, president of Miller Samuel, a residential real estate appraiser, told Businessweek.
Nonluxury apartments are mostly sought after by first-time buyers. And in this market they may have to throw their tight budgets out the window.
The average price of a two-bedroom Manhattan apartment is $1.35 million, and adding another bedroom brings that price up to $2.63 million.
That is a 7.8% price increase from last year .
And just think what that could buy you in the rest of America. The national average for a single family home is $214,200.
Prices are being driven up as a result of a shrinking inventory and developers focusing on ultra-luxury buildings. And current owners are holding on to their properties, waiting for the market to full recover.
But, if you're in the market for a luxury space you're in luck. Prices of luxury apartments are down 8.9% to $5.25 million year over year.
Seems like a few extra million is the only difference between the lap of luxury and a standard two-bedroom.