Halstead Property

Gregory J. Heym
Executive Vice President, Chief Economist
(212) 546-1069

Real Slow Estate

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.

braden.keil@nypost.com

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Thursday, November 10, 2005