Diane M. Ramirez
Gregory J. Heym
Executive Vice President, Chief Economist
By Dave Hogarty
The first quarter 2012 market reports are out and they paint a picture of a stable market that's a being held aloft by high-end sales, but also getting serious support from the lower-end of the market, as New Yorkers are being driven from the increasingly pricey rental market into home ownership. In the Prudential Douglas Elliman report, the number of first-quarter sales dropped 3.5% year over year, to 2,311—the result of a lingering hangover from market difficulties around the end of 2011, like economic volatility, 400 point swings in the market, Europe, and political stalemate in DC on the economy. The net result was a pause by homebuyers until late February. The quarter's standout sales performance was sales of studios and 1BRs, which grew from 49.4% of sales in 2011 to 56.2%—what report author Jonathan Miller identified as the highest market share since the "Year of the First Time Buyer" in 2009.
This shift in market share towards lower-end sales "was caused by the sharp drop in mortgage rates last fall and continued tightness of credit driving rents higher," explained Miller, who foresees a robust spring as pent-up demand from the first quarter is released in April and coming months. New development sales were another market hotspot according to the Elliman report. They were up 12.7% year over year—ending a three-quarter sequential decline—and accounted for 16.9% of all sales during the first quarter. Average sales price and median sales price of new developments dropped 9.7% and 27.2%, respectively, during the period, but that was due to a downward shift in market mix towards lower-end sales. The price of new development sales per square foot actually grew 1% during the quarter, to $1,263.
The Street Easy Condo Market Index shows a continuation of the flatness in the condo market over the past two years, with the rate of return of condo ownership still 12% below its 2008 market peak. Other market reports showed hot spot activity in larger-sized apartments. The Brown Harris Stevens Q1 numbers showed that average selling prices increased sharply year over year in co-ops (17%) and condos (21%) for 3BR apartments and larger. Halstead Property's first-quarter reports showed similar strong growth in the average sales price of higher-end apartments.
Tuesday, April 03, 2012