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Condominium, Co-Op Sales Skyrocket

Apartment sales skyrocketed this summer, spurred by the possibility of rising interest rates, industry experts said.

A report released yesterday said sales of condominium units soared 87% over the total a year ago, to 1,916 transactions in the third quarter, and sales of co-operative units increased 47%, to 1,229. The total of 3,145 in the quarter ending September 30 was the highest for any quarter in the 11-year history of the sales tallies by the Real Estate Board of New York.

With interest rates widely expected to rise, buyers and sellers have been racing to close deals, experts on real estate said.

"Sellers are worried interest rates are rising, and want to sell before values are lowered, and buyers want to get mortgages now before rates go up," the head of research for the Real Estate Board, Michael Slattery, said.

Average sales prices for condos and co-ops rose again in the third quarter, continuing a trend that started several months ago, with the average condo price increasing 19% over the same period last year, to $997,000, and the average sales price for co-ops rising 17%, to $1.056 million. It was the third consecutive quarter in which average co-op sale prices topped the million-dollar mark.

Median sales prices, often considered more accurate than average sale prices, also saw double-digit increases, with median sales prices for condos up 12%, to $665,000, and for co-ops up 13%, to $660,000. The median price is the midpoint, with half of sales below and half above that price level.

"There has been a major pickup in the market in past few weeks," a top broker at Douglas Elliman, Tamir Shemesh, said. "Wall Street has reacted positively to Bush winning the election, so it looks like the real-estate market will continue to do well, even if the rates do rise somewhat."

Officials of the Federal Reserve Board are meeting tomorrow, and are expected to raise the target for short-term interest rates by a quarter-percentage point, to 2%, bringing rates to their highest level since November 2001, when the Fed cut interest rates following the September 11 attacks.

Even if the target is indeed set at 2%, however, mortgage rates - which run at perhaps three times that figure - would still be at historic lows.

By most measures, the Fed is a long way from normalizing interest rates, which hit a low of 1% earlier this year, and experts say that short-term rates, even with a hike this week, would still be equivalent to slightly below zero, after subtracting the effect of inflation.

"The real-estate market often lags behind Wall Street," Mr. Slattery said, and despite the shadow of rising rates, the New York condo and co-op market continues to boom, as indicated by the strong showing in the quarterly report.

The average sales price for co-op apartments with four-plus bedrooms increased 71% to $4.794 million over the July-through-September period a year ago, and the average sales price for those large apartments in prewar co-ops rose 88%, to $5.93 million.

Other eye-catching data include the median sales price for a prewar two-bedroom co-op apartment, which reached the $1 million threshold for the first time since the report was begun, an increase of 20%.

For condos, apartments of all sizes saw increases in median sales prices, including three-bedroom units in prewar buildings, which climbed 38% to a median price of $901,000, while three-bedroom post-war condos rose 31% to a median price of $1.116 million.

Downtown condos also showed large gains, due largely to a high number of residential conversions in Wall Street and Lower Manhattan and new condo construction in the West Village, Mr. Slattery said.

The median sales prices for downtown condos surged 22%, to $683,000, in the third quarter, while the average prices for a downtown condo rose 21%, to $983,000.

For downtown co-ops, the average sales price rose 36% to $724,000, while the median sales price increased a more modest 17% to $487,000.

The average sales price for prewar condos downtown increased 32%, to $1.61 million and postwar units were up 30%, to $754,000.

On the West Side, the average sales price for a condo increased 26% over the third quarter of 2003 to $1.134 million, while co-op prices rose 22% to $1.069 million.

The average sales price of condos on the East Side rose 17%, to $959,000, while the average price for co-ops rose 10%, to $1.259 million.



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