Gregory J. Heym
Executive Vice President, Chief Economist
The bubble has popped! Long live the bubble!
Much was made in recent weeks of brokerage and appraisal reports that the average price of a Manhattan apartment had tumbled in the third quarter, suggesting that the real estate market had reached a turning point. But averages can be deceiving, and data on closed sales in September suggests other interpretations.
A new report on the Manhattan market by Halstead Property shows that the average price of an apartment - excluding lofts - fell considerably in July and then rose in both August and September.
"Everybody's saying it's starting to get bad, but August and September were better than July, so how's it getting worse?" said Gregory J. Heym, vice president and chief economist for Halstead. "It's not a way to prove that there isn't a market decline, but it certainly has to put into question that the market is getting worse."
The Halstead report shows that the average apartment price fell to $1.115 million in July from a high of $1.33 million last June. It then rose to $1.145 million in August and $1.187 million in September. The median price - the point where half the apartments sold for more and half sold for less - also fell, to $725,000 in July and August from a high of $831,250 in June, then rose again to $749,000 in September.
The report was based on 667 co-op and condo sales that closed during the month.
The average price in September was 12 percent higher than the previous September and the median was 15 percent higher than the sales figures from the same month a year ago.
A report by Brown Harris Stevens evaluating 2,380 sales in the third quarter, also produced by Mr. Heym, was released earlier this month, showing that the average apartment price had dropped 10.8 percent from the previous quarter, although it was still higher than the third quarter average a year earlier. Data from other brokerage firms showed similar declines.
Along with other signs of a slowdown, including reports of increased apartment inventory and apartments taking longer to sell, the drop in the average price led some observers to predict an end to the boom market of the last few years. But the average largely reflected a decrease in the number of very high-end properties that had closed in the quarter (for instance, Rupert Murdoch bought a $44 million apartment on Fifth Avenue, and it closed in May).
Other segments of the market held their own. One-bedroom apartments made up 43 percent of the third-quarter market, according to the Brown Harris survey, and their average price rose 1.7 percent from the previous three months, and 17 percent from a year earlier.
Sunday, October 23, 2005