Gregory J. Heym
Executive Vice President, Chief Economist
By BRADEN KEIL
Has the Manhattan residential real-estate bubble finally burst? Apartment prices continued a downward trajectory in October on the heels of a disappointing third-quarter report, according to the latest monthly figures by Halstead Property.
Median and average apartment prices fell 4.2 percent and 8.4 percent, respectively, from the end of September, and a whopping 15.9 percent and 18.3 percent since June, says the report. It attributes the continuing downswing primarily to "a lack of closed sales at the high end of the market [that] kept the average sale price down in October, which at $1,088,941 was only 1 percent higher than a year ago."
"It's the slowest month I've seen in at least three years," said one top broker who requested anonymity. "We certainly thought things would pick up after the summer."
Others are surprised the party has lasted this long. "You've got million-dollar studios, a one-room apartment for over a million bucks in the West Village," said another broker. "Of course people are going to have to wise up sooner or later."
But buyers are showing signs of wariness, with bidding wars being replaced by price reductions, and Federal Reserve Chairman Alan Greenspan's warning of a "froth" and "local bubbles" in the real estate market beating louder. "People are a little hesitant right now because they heard so much and read so much about bubbles and price declines," said Greg Heym, the chief analyst for Halstead.
"There are probably a fair amount of people that are holding off [buying]. It would make sense that the bigger the price, the more hesitant you might be." The only categories in the report that showed any strength from the second to the third quarter were studios and one-bedroom apartments.
Real-estate appraiser Jonathan Miller sees the gap widening between asking price and sales price. "One of the effects of a moderating market is that sellers are typically behind the curve when it comes to perceptions on pricing their apartments," he said.
Miller says the Manhattan market in the third quarter "shifted gears," and that even if the market sees more modest gains in the future, sellers will continue to base their prices "on the old model for the next several quarters as they remain in denial about the change."
But not everyone agrees with the glum assessment. "If the high-end market is coming down, I haven't been privy to it," counters Prudential Douglas Elliman's top broker, Dolly Lenz, who says she has already closed on three apartments in excess of $15 million.
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Thursday, November 10, 2005