Gregory J. Heym
Executive Vice President, Chief Economist
BY DAVID LOMBINO - Staff Reporter of the Sun
A year after the city's red-hot real estate market first cooled off, Manhattan apartment prices are falling, according to separate reports to be released today by three of the city's largest real estate brokerages.
The average sales prices of co-ops and condominiums dropped by as much as 7% in the third quarter of 2006, with prices of co-op apartments falling more steeply — as much as 20%, according to one report. Condominium prices were up by between 2% and 5% last quarter, the reports said.
The reports differed on the change in average sales prices versus the same period last year, from as high as an increase of 12% to as low as a drop of about 4%.
An appraiser who produced the quarterly report for Prudential Douglas Elliman, Jonathan Miller, said that Manhattan apartment prices have basically stayed flat so far in 2006.
Investors in New York's housing market would likely have enjoyed better returns on Wall Street, where the Dow Jones Industrial Average rose to a record high yesterday. (An article is on page 9.)
Mr. Miller said co-op prices appeared to drop because there was a shift in the mix of apartments that were sold to smaller and cheaper units.
"The numbers weren't as negative as I thought they would be," Mr. Miller said. "This is a tempered response compared to the national market."
Following the negative national housing numbers that were released last week, some real estate analysts were bracing for the worst. But Mr. Miller said that the national housing market, especially in San Diego and Miami, have a much higher rate of investor activity than New York, and have seen even more new construction. As investors have fled and inventory has stacked up nationally, those markets declined more precipitously than New York, he said.
Over the last year and a half, Manhattan's inventory of apartments on the market rose rapidly, causing some experts to fear that an apartment glut would cause a price drop.
The statistics released today show that inventory has leveled off. The number of sales increased more than 9% versus last quarter, to 2,113, and properties are staying on the market for an average of 150 days, according to Prudential Douglas Elliman's report.
"It's a buyer's market," Mr. Miller said, "but not all the way in that direction."
Manhattan's residential market posted record gains through the first half of 2005, before falling off in all significant categories in the third quarter. At the end of 2005 and beginning of 2006, sales dropped significantly, inventory began to pile up more rapidly, and properties showed more stable appreciation rates.
In the second quarter of 2006, the average sales price of condominiums dropped sharply, causing concerns that new condo development created a glut. This quarter, the price of co-ops, which make up about 75% of New York's for sale housing stock, is taking a down turn.
An economist for Halstead, Gregory Heym, said that the statistics released today describe a more balanced, stable market than New York has experienced in recent years. "Coming off record prices from a year ago, and to be down 4% from there, is not such a dramatic decline," Mr. Heym said. "The market is not growing at 30% anymore, but values are still holding."
He said that the new developments tend to be smaller, pushing down the average sales price. The report released today by the Corcoran Group showed that price per square foot rose in the last quarter, while the average price fell.
Despite new condominium units streaming on to the market, Mr. Heym said that buyer demand is still strong, and absorbing the new units without a significant price decrease.
The CEO of Prudential Douglas Elliman, Dottie Herman, said, "We are not in a heated up market anymore, but we are not going to bust."
Ms. Herman said that the year ahead should be relatively stable "as long as the inventory doesn't continue to mount."
"We've held our own, but other parts the country haven't. I don't see anything in the near future that will change that," she said.
Wednesday, October 04, 2006