Gregory J. Heym
Executive Vice President, Chief Economist
Diane M. Ramirez
Manhattan apartment prices fell for a second consecutive quarter, helping drive the biggest gain in sales in more than 13 years as buyers seized on discounts.
The median price slid 8.4 percent to $850,000 in the third quarter from a year earlier, New York appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said today. The number of sales jumped 46 percent from the second quarter, the biggest third quarter increase since 1996.
Values fell for cooperatives and condominiums of every size and price as New York City’s unemployment rate jumped to 10.3 percent in August. While the declines weren’t as deep as the second quarter, Manhattan is far from recovering from a recession and global credit crisis that has led to the loss of more than 183,000 banking and securities jobs in the Americas. Year over year, third-quarter sales declined 16 percent.
“We’re turning the corner but we are not at a bottom,” Jonathan Miller, president of Miller Samuel, said in an interview. “We still have very tight credit, elevated unemployment and we have shadow inventory.” There are about 6,000 apartments in new developments that haven’t been listed for sale, he said.
Five reports issued today showed overall price declines in Manhattan. The Corcoran Group, which conducts its survey with research company PropertyShark.com, said the median dropped 18 percent from a year earlier. Brown Harris Stevens and Halstead Property LLC put the decline at 14 percent and StreetEasy.com said the drop was 12 percent.
The number of apartments for sale declined 4.6 percent from the previous year to 8,389 listings in the third quarter, according to Miller Samuel and Prudential. It was the first year over year decline in sales inventory since the fourth quarter of 2007, Miller said. The ten year average is 7,142 apartments listed for sale in each quarter.
“We’re still above the historic norm, which is another compelling argument that we haven’t bottomed,” Miller said.
Studio apartment prices fell 6 percent from a year earlier to a median of $399,000, Miller Samuel said. One-bedrooms dropped 11 percent to $645,000; two-bedrooms fell 23 percent to $1.18 million and three-bedrooms dropped 41 percent to $2.25 million.
Four bedroom apartments plunged 49 percent to a median of $5.18 million, reflecting, in part, a decline in luxury sales, Miller said. Those sales declined 16 percent. The luxury segment is defined as the top ten percent of co-op and condo sales.
“There were many meaningful price reductions which clearly drove buyers back in to the market,” Pamela Liebman, chief executive officer of New York-based broker Corcoran Group, said in an interview.
James Kennedy, 53, is among the beneficiaries of the change in the market. Kennedy, an attorney at the Wall Street law firm Kennedy Johnson Gallagher LLC, started his apartment search in the middle of 2008, hoping to move into Manhattan from Staten Island once his daughter left for college last month.
His yearlong search got him more apartment for his money, he said. Kennedy closed in August on a 2,170 square-foot condo in the Financial District. The price was reduced 16 percent.
“I wanted to take advantage of the softening in the market and, for $1.6 million, I came away with an apartment that two years ago would have been substantially more,” Kennedy said as movers were clearing his house in Staten Island.
The Rector Street apartment has views of Governor’s Island and the Statue of Liberty and is within walking distance of his office.
“My friends have apartment envy,” he said.
About 36 percent of third-quarter listings included discounts from the original asking price, according to StreetEasy.com, a service that compiles listings from brokers.
About 2,900 cooperative apartments were listed with price cuts, a 77 percent increase from a year earlier. There were also 2,400 condo listings with price cuts, 72 percent more than last year, StreetEasy said.
In midtown, condo owners pared an average of 8.3 percent off their asking price, while downtown owners trimmed 8.4 percent.
Many buyers shunned new buildings. Sales in new developments plunged 65 percent from last year, making new construction only 19 percent of the sales market in the third quarter, according to StreetEasy.
“Buyers were no longer walking into sales centers and buying units sight unseen,” Sofia Kim, vice president of research for StreetEasy, said in an e-mail. “People were now looking for value, not Starchitect-designed buildings or unnecessary luxury amenities.”
On the Upper East Side, the median price of existing co- ops fell 6 percent to $741,000, according to Corcoran and PropertyShark.com. Condominiums in the area fell 6 percent, to a median of $1.15 million. On the Upper West Side, co-op re- sales slid 15 percent to a median of $744,000, and condos climbed 9 percent to a median of $1.29 million.
The average price per square foot of condos on the Upper East Side fell 10 percent in the third quarter to $1,249, according to Halstead and Brown Harris, both owned by Terra Holdings LLC.
The average price per square foot of condominiums on the Upper West side also fell 10 percent, to $1,306. Sales at 15 Central Park West figure into that decline, with seven closings there in the third quarter, compared with 23 the same time last year, said Gregory Heym, chief economist for Terra Holdings.
The market reports issued today are compiled from public records and brokers’ proprietary data.
Friday, October 02, 2009