Apt. prices in 11% leap

Manhattan apartment prices soared to the second-highest level ever in the last three months and the average size grew 10% as more buyers snapped up larger units. The average price in New York's most expensive borough climbed 11% to $864,860 from $779,112 in the previous quarter, according to appraiser Miller Samuel and Douglas Elliman, Manhattan's largest residential brokerage. The share of two-bedroom units increased to 45% from 41%. The move to bigger apartments is a sign buyers expect the economy to recover, said Jonathan Miller, president of Miller Samuel. From Sept. 11, 2001, to the first three months this year, the market was driven by first-time buyers taking advantage of lower mortgage rates to purchase studios or one-bedroom units, he said. "Any time you see a move into larger apartment sizes, it means people are making more of a financial commitment and it's not just mortgage-rate driven," Miller said. "It's the first shift in this direction since the Sept. 11 terrorist attacks."

The highest average price was $894,617 in the second quarter of 2001, Miller said. The number of sales grew to 2,055 from 1,858, as the inventory of homes for sale dropped to 6,058. "The lower end of the market has not let up since last year, driven by lower interest rates," said Pam Liebman, chief executive of Corcoran Group, the second-largest Manhattan brokerage. "Now we're seeing the rest of the market jump in." Sales of luxury apartments rose 10% to 205 units, though they showed a 25% drop from a year ago. The average price of a luxury apartment jumped 13% to $3.05 million from $2.69 million in the previous quarter. That puts luxury prices back to where they were a year ago, when the average sale price was $3 million, Miller said. "The luxury market in New York follows Wall Street," said Patricia Burnham, president of P.S. Burnham, a Manhattan brokerage that specializes in high-end sales. "When things start to look a little better in the stock market, as they have been, we see prices start to firm." The S&P 500 index surged 15% in the second quarter, the biggest advance in stock prices since the end of 1998.