Gregory J. Heym
Executive Vice President, Chief Economist
By JANET WHITMAN and BRADEN KEIL
September 26, 2006 -- As home prices across the nation dropped more than they have in a decade, the often-sizzling New York real estate market is bracing for a chill.
The median price for a home in the United States fell to $225,000 - down 1.7 percent from August of last year, according to figures released yesterday by the National Association of Realtors - the first time in 111/2 years the market has had a year-over-year decline.
In New York City, where the median price for a home at the end of June was $474,000, a steeper drop in home values is expected.
"Higher-priced markets are seeing larger declines," Lawrence Yun, an economist with the National Association of Realtors told The Post. "People just cannot afford them because they've risen so much in places like New York."
Already, local real estate brokers say, the glittering new condo developments springing up around the city are seeing a sales slowdown, and are considering shifting gears to become rental towers.
The nation's slumping housing prices reflect the pace of existing home sales that fell for the fifth-straight month in August, slipping 0.5 percent to a seasonally adjusted annual rate of 6.3 million units.
"Price drops are very unusual," said Yun. "Nevertheless we have been anticipating the softness in prices and for prices to actually turn negative given the significant run-up in inventory."
New York prices could go down about 5 percent from a year ago, Yun said, adding the slump will continue until the spring or summer.
"Five percent is a rather modest drop after several years of strong price increases," he said.
Local economists are not quite as pessimistic as Yun, but still feel the next few months will be bumpy for sellers.
"I wouldn't be surprised to see some dips in the market," said Jonathan Miller of Miller Samuel appraisers. "Inventory, especially with all the new development, is going to temper any optimism. Buyers simply have more choices."
Gregory Heym, chief economist for Brown Harris Stevens and Halstead Property, added, "Any time you hear national numbers like that, it's going to impact people here to some degree. But every national market report has regional factors that can vary."
Heym noted the local economy is "strong" and, unlike other parts of the country, space on the island of Manhattan is limited. Still, Heym would not say he's bullish on the market in the short term.
While the disappointing national numbers are not a complete surprise, given the unprecedented price surge of the last decade, the psychological impact could sway an already dicey, inventory-heavy seller's market into a major downswing.
A recent survey of retail investors by TD Ameritrade showed that 77 percent believe that real estate is now a buyer's market.
Tuesday, September 26, 2006