Halstead Property

Diane M. Ramirez
President
dramirez@halstead.com
(212) 381-3203

Price Cuts Fuel Jump In Manhattan Apartment Sales

By Amanda Fung and James Comtois

The Manhattan residential real estate market continued to improve in the first quarter of the year, with the number of sales running at nearly double the level for the same period of 2009, according to several market reports released Friday.

Sales in Manhattan surged to 2,384 units in the first three months of 2010, according to a report by Prudential Douglas Elliman and Miller Samuel Inc. While that is a welcome contrast to last year's severely depressed levels, it simply brings sales back to their five-year average of 2,376, notes Jonathan Miller, chief executive of appraisal firm Miller Samuel. The good news though is that sales have now run near that level for three quarters in a row.

“Right now things are much better than they were a year before,” said Mr. Miller. “The first half of 2010 will be a continuation of the second half of last year, and the market will move sideways.”

The increase in sales activity was helped along by price cuts. Median sales prices fell 11% to $868,000 from the first quarter of 2009, according to the report. Sellers began to price their properties more reasonably and buyers simply reacted to that, Mr. Miller said.

“At Halstead, we currently are seeing a number of all-cash purchases, an increase in international buyers and a continuation of first-time home buyers seizing the opportunity to buy a piece of Manhattan real estate,” said Diane Ramirez, president of Halstead, in a statement. Halstead's market report also indicated a median price dip of 10% from the first quarter 2009.

In another positive sign for the market, the inventory of unsold units fell over the course of the year, dropping 23.1% from its historic highs of 10,445 in the first quarter of last year, Mr. Miller said.

In the first quarter, however, a wave of people putting their houses on the market sent the inventory spiking back up to 6,851, an increase of 17.2% over the three months. Meanwhile, the number of units from new developments in Manhattan coming onto the market fell to near zero, according to a separate report by The Corcoran Group.

Another report by StreetEasy.com showed that 2,390 apartments went into contract during the first quarter, up 76% from the same period last year and up 5.2% from the previous quarter.

Despite the good news, Sofia Song, vice president of research at StreetEasy.com, remains cautious. “I wouldn't bust out the champagne just yet. There are all these positive signs, but I'd be very wary of them,” she said. “Many of these positive signs have been propped up by these federal policies [such as the tax incentive for first-time home buyers].” The first-time home buyer tax credit will expire at the end of June.

Mr. Miller is also concerned. He notes that unemployment rates remain high and that there are about 6,500 units of shadow inventory--units in new developments that have not hit the market yet. Additionally, news this week that the federal government has stopped purchasing mortgage-backed securities may cause a modest uptick in interest rates.

“We still have a lot of issues to wrangle out,” he said, noting that he is concerned about activity during the latter part of this year and early 2011.

Friday, April 02, 2010