Halstead Property

Home Prices Fall In Manhattan As Housing Market Cools

NEW YORK (Dow Jones)--Housing market watchers can exhale. Prices in some of
the nation's hottest markets are at least leveling off, and in some cases even
coming down.

In New York, a report prepared by appraisal company Miller Samuel Inc. on
behalf of real estate firm Prudential Douglas Elliman released Tuesday showed
that average Manhattan apartment prices fell nearly 13% in the third quarter
2005 to $1.15 million from $1.32 million in the second quarter.

Housing stock is also staying on the market longer, the report showed, with
the number of days it takes to sell an apartment increasing a month to 133 days
from 102 days.

The report was confirmed by other research, including reports from two other
real estate firms, Brown Harris Stevens and Halstead Property. These showed that average apartment prices in Manhattan were down 11% in the third quarter for
co-ops to $1.04 million from $1.17 million in the second quarter, and down 10%
for condominiums to $1.28 million from $1.42 million in the previous quarter.

Data released earlier in the week by real estate appraisal firm Mitchell,
Maxwell & Jackson Inc. showed that average Manhattan apartment prices for co-ops and condos south of 96th Street fell 3.9% to $1.09 million, the first time in
two years the firm had seen a drop in prices. The decline followed a drop in
overall demand, according to Mitchell, Maxwell & Jackson managing director
Michael Martin, as the number of sales dropped 33% to 1,031 from 1,528.
The Prudential Douglas Elliman report also showed a decline in sales, albeit
more modest. In the third quarter, the number of sales dropped 8.4% to 1,997
from the prior quarter's total of 2,181, "as mixed economic news weakened
demand," the firm said in a press release.

Slowdown Not Just In New York

The apparent slowing in the New York housing market followed signs of cooling
off in markets across the country. The most recent national data have been
mixed, while reports from specific West Coast markets have been pointing to a
possible slowing of demand.

New home sales reported last week fell 9.9% to a seasonally adjusted rate of
1.24 million units in August, according to the Commerce Department. But the pace
of existing home sales rose 2% in August to 7.29 million units, a near-record
pace, according to the National Association of Realtors.

In San Francisco, the number of homes sold in August dropped 9.9% to 662 from
735 sold in the same month a year ago, though median prices still climbed a
healthy 11.5% to $745,000, according to DataQuick Information Systems. In San
Diego, the number of homes sold dropped 3.6% to 5,379 from 5,580 a year earlier,
and the median price rose just 2.1% to $493,000.

With home prices appreciating routinely at a double digit pace for a couple of
years in certain metropolitan markets, analysts have long predicted a slowdown
would eventually take hold. In New York, prices "are going to reach a level that
just can't be sustained," said Martin, the managing director at Mitchell,Maxwell & Jackson.

Particularly with short and long-term interest rates heading higher,
affordability may start to make buyers more resistant to high prices in the
coming months, he said, at least in the under-$2 million market where buyers are
more sensitive to changes in interest rates.

But so far, Martin said he doesn't see signs of a bubble bursting. More
likely, he said, there will be "a soft landing," in which prices ease up a bit
and then level off for a time.

-By Danielle Reed, Dow Jones Newswire

Tuesday, October 04, 2005