Gregory J. Heym
Executive Vice President, Chief Economist
By Oshrat Carmiel
Manhattan co-op prices dropped the most since 1995 and transactions for all apartments plummeted 48 percent in the first quarter from a year earlier as the recession and Wall Street unemployment cut demand.
The median price for co-operative apartments fell 22 percent to $587,500, according to a report today by New York appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate. The median for all apartments rose 3.1 percent to $975,000, led by closings at new luxury developments where contracts were signed at the market’s peak.
“The crisis on Wall Street took a lot of our buyers out of the market,” said Chief Executive Officer Pamela Liebman of property broker the Corcoran Group. “We didn’t have the bonuses that we had in the last couple of years helping to drive the prices up.”
New York City has been girding for a drop in property values since three of the five largest investment banks collapsed last year. Banks and securities firms eliminated more than 180,000 jobs in the Americas so far, according to data compiled by Bloomberg, while mortgage-related asset writedowns and losses now top $1.29 trillion. Wall Street bonuses declined 44 percent, according to New York State Comptroller Thomas DiNapoli.
Five property brokers and real estate Web sites issued market reports today. Two said Manhattan’s overall median apartment price fell and three said it rose. The groups cull information from city records and their own data.
Condos Bolster Prices
Corcoran said median prices dropped 2 percent and Streeteasy.com said they fell 3.4 percent. The declines would have been greater if new developments were excluded.
“That’s kept prices propped up,” Liebman said. “Now that many of those sales have worked their way through the pipeline, you will start to see additional price deterioration.”
The median price of condos, which account for about one- third of New York’s owner market, climbed 5.8 percent to $1.23 million, Miller Samuel said. Condo buyers hold the deed to their property, while co-op owners get shares in a corporation that controls the building.
The median price of studios dropped 12.3 percent to $437,500, according to Miller Samuel. One-bedroom apartments dropped 10.7 percent to $710,000 and 3-bedrooms dropped 2.6 percent to $3.75 million. Two-bedroom apartments saw the smallest decline, dropping less than 1 percent to $1.6 million.
Manhattan apartment prices doubled during the five-year housing boom, culminating last year with record sales at 15 Central Park West and the former Plaza hotel, each offering units for more than $6,000 a square foot.
Buyers at 15 Central Park West included Goldman Sachs Group Inc. Chairman Lloyd Blankfein and former Citigroup Inc. Chairman Sanford Weill. Developer Harry Macklowe purchased multiple units at the Plaza.
Today’s rising inventory and shrinking sales will pressure sellers to lower prices, said Jonathan Miller, president of Miller Samuel.
Inventory climbed 34 percent to 10,445 apartments at the end of March, the highest since Miller Samuel began tracking the number in 1999.
Transactions dropped to 1,195, the fewest since the fourth quarter of 1994, according to Miller Samuel.
“Sales activity is the barometer for the health of the market -- not price,” Miller said. “If sales activity is very low that leads to declining prices.”
Manhattan sellers have already cut prices the most in at least a decade, offering average discounts of 12.4 percent in the three months ended March 31, according to Miller Samuel. The average discount a year ago was 3.2 percent.
The steepest reductions were in Lower Manhattan, according to Streeteasy.com.
In the Financial District, sellers cut prices on 28 percent of all listings, shaving an average of 11.3 percent from initial asking prices. In TriBeCa, 24 percent of advertised apartments included reductions, averaging 11 percent off.
Luxury apartments on the Upper West Side at 15 Central Park West pushed condo prices to record levels in 2008. With initial sales there now finished, the average price per square foot for the neighborhood fell 25 percent, according to broker Brown Harris Stevens.
“It happened very quickly,” said Gregory Heym, chief economist for Terra Holdings LLC, which owns Brown Harris Stevens and Halstead Property LLC. “Most of this is going from a pretty strong market to a dramatic slowdown in a matter of couple of months.”
Thursday, April 02, 2009