Gregory J. Heym
Executive Vice President, Chief Economist
The entire industry has been holding its breath in anticipation of this moment, and here we go: the release of the major brokerages' Q1 market sales reports. Will the credit crunch and the mortgage crisis finally infiltrate Manhattan real estate? Will Wall Street layoffs slow the now years-strong market surge? No, yes and maybe. Here's the headline: prices are up—again. In fact, the average sales price reached a new record. Jonathan Miller's report for Elliman has the Q1 average sales price at $1.72 million, up 33.5% from Q1 2007. Gregory Heym's Halstead/Brown Harris Stevens report (not online yet) has the number at $1.69 million, up 46% from his numbers last year. Wow! But we all know those numbers are inflated by the 15 Central Park West and Plaza closings (for the quarter, 71 apartments sold for more than $10 million, compared with 17 in Q1 2007), so what about the median? Elliman has the median sales price at a record $945,276, up 13.2% over last year, while Halstead/BHS has it at $855,000, also a record and up 13%. Woo, the bulls win! Let's pop the champagne! Well, hold that thought, because here is where things get a little dicey.
The second major headline: sales are slowing, and inventory is up. Ruh-roh. And here's where we see some differing numbers on how bad the problem is. Elliman reports that the number of sales dropped 34.3% this quarter to 2,282 units, compared to 3,474 units sold in the prior-year quarter. Halstead/BHS saw only a 1% drop, and the Times reports that Corcoran (we haven't received their report yet) also saw a "slight drop." Despite the discrepancy, it seems like all the analysts agree that these trends show a slowdown on the horizon, but not a crash. Some other worrying numbers from Elliman's report: Listing inventory increased 4.6% to 6,194 units, and the always-fun "days on market" average hit 146 days this quarter, up from 131 days in Q1 2007.
In Brooklyn, the news was a little worse, meaning the borough also showed warning signs without bothering to give us any of those fun blockbuster numbers that Manhattan provided. Corcoran's report shows a 2% drop in both median and average sales prices. The median was down to $549,000, from $560,000. In the Times, CorcoBoss Pam Liebman explains it well: "When buyers become more cautious, the first markets to feel it are those that have been considered to be emerging neighborhoods." OK, let the spin begin!
Wednesday, April 02, 2008