Diane M. Ramirez
Gregory J. Heym
Executive Vice President, Chief Economist
Five—count 'em, five—marketplace reports suggest demand for Manhattan apartments remains steady. Median sales price: $911,333, down just 0.3% from year-earlier period.
By Amanda Fung
Fears that the economy may be returning to the bleak days of 2008 don't appear to have dampened Manhattan's residential real estate market. Five marketplace reports released Tuesday morning reveal that residential sales here remain fairly stable and are healthier than they've been in years.
There were 3,750 transactions during the third quarter, the highest number of sales since the second quarter of 2008, before the downturn, according to the Corcoran Group.
And apartment prices for the third quarter were stable: The median sales price for a Manhattan apartment was $911,333, down a mere 0.3% from the same time a year ago, according to a different report by Prudential Douglas Elliman and Miller Samuel Inc., an appraisal firm.
The boost in third-quarter sales activity was largely driven by foreign buyers taking advantage of the weak U.S. dollar, both brokerages note. “Overall the market is stable, clearly fragile given the world right now,” said Jonathan Miller, CEO of Miller Samuel. “But on a whole, the market seems to be in a pretty good place relative to the rest of the country.”
In another positive sign, inventory levels are below the norm, according to both reports. There were 7,726 apartments available for sale at the end of the third quarter, down 4.9% from the year-earlier period, the Ellliman/Miller Samuel report said. That level is 2.7% below the five-year quarterly average of 7,937, and only slightly above the 10-year quarterly average of 7,413.
Halstead Property reports it will take seven months to absorb the supply of apartments on the market. In a stable market it takes six to nine months to do that, according to Diane Ramirez, president of Halstead Property. “These are clear indications of a good balance in supply and demand,” she said in a statement.
The low inventory levels will have a positive impact on apartment values, noted Hall Willkie, president of Brown Harris Stevens, adding that people are no longer waiting for prices to drop. “When the crisis first happened, buyers wanted to know when prices would hit the bottom,” he added. “Today, that is no longer the case.”
Sales of high-end apartments continued to remain strong during the third quarter. During the quarter, Brown Harris Stevens recorded a 16% increase in the number of sales for apartments that were more than $5 million. The sales on the upper end of the market boosted the average sale prices by 1% to $1.4 million, according to both Brown Harris Stevens and Halstead Property.
“The higher end of the market is moving because financing is easier and real estate is a safe bet, investment-wise, over the long haul,” said Dottie Herman, CEO of Prudential Douglas Elliman.
But it's not just the high end that is driving the market. Even smaller apartments are trading hands, according to Mr. Miller. Studio and one-bedroom apartments represented 48.3% of all sales that took place during the third quarter, approaching the 20-year quarterly average of 51%. Sales in that segment represented 44.5% of all sales in the third quarter of 2010.
The four market reports released by brokerages are based on closed transactions, so they represent market conditions and buyer sentiments from a few months ago when the contracts to purchase the apartments were first signed. Streeteasy.com, which also released a report on Tuesday, tracks contract signing activity, which some say offers a better indicator of the latest market sentiment. Its report found that there were 1,937 contracts signed during the third quarter, down nominally by 0.1% from the same time a year ago.
“The economy is not scaring buyers away,” said Pamela Liebman, CEO of the Corcoran Group. “Buyers are more focused on their individual situations. They are not allowing fears to impact their housing decisions.”
Tuesday, October 04, 2011