Gregory J. Heym
Executive Vice President, Chief Economist
By JOSH BARBANEL
In an uncertain real estate market, the number of sales of Manhattan co-ops and condominiums fell sharply in the last quarter, though prices were mostly flat, according to market data released yesterday.
Sale prices remained above the levels of a year ago although they were below the record high prices reported in the spring.
Sales usually slow during the holiday season, but this decline was precipitous, 21 percent below the number reported in the previous quarter and 27 percent below the number of sales in the last quarter a year earlier, according to a market report released yesterday by Prudential Douglas Elliman.
The decline was widely attributed to uncertainty by buyers who were spooked by reports of a real estate bubble about to burst, and worries over the economic damage from higher gasoline prices, hurricane damage and rising mortgage rates. The Elliman study reported 1,574 sales in the last three months, compared with 1,997 the previous quarter and 2,181 in the spring when prices were highest.
"There was a negative swirl in the market; every pronouncement using the bubble term made buyers pause," said Jonathan Miller, the president of Miller Samuel Inc., an appraisal firm, who prepared the Elliman report. "We are not seeing prices fall; we are just seeing fewer sales."
Adding to the uncertainty was the release of three contradictory market reports yesterday purporting to measure the same thing - current prices of Manhattan co-ops and condos. Prices were reported to be up slightly, down slightly, or down more sharply, from the previous quarter, depending on who was counting.
The Elliman report found that despite the slowing sales, the average price of a Manhattan apartment rose 3.3 percent, to $1,187,000, from the previous quarter, but nearly 10 percent below the peak reported in the second quarter. Even so, the average remained 23 percent above the average in the last quarter of 2004.
And it reported that the average sale price per square foot - which takes into account the changes in mix of large and small apartments - rose above $1,000 for the first time this quarter, to $1,002 a square foot.
A second report by two other brokerage firms, Brown Harris Stevens and Halstead, found that average prices declined from the previous quarter by 4.3 percent, to $1,090,000. A third report by the Corcoran Group, found that average prices had declined 7 percent, to $1,129,000.
The differences reflect the difficulties in collecting data in Manhattan, where co-op sales prices are not publicly reported, and condominium sale deeds are often filed a month or more after a sale is completed. But they may also reflect changes in the market that occurred late in the quarter that were picked up by some surveys but not by others.
Brokers said, for instance, that they had seen a flurry of contracts in the last few weeks, especially in the more expensive apartments, as buyers contemplating softening prices and end-of-year bonuses decided to overcome their fears and buy. But most of them would not have found their way into the reports.
"There was significant pickup in the last six weeks of the market; the buyers came flocking back," said Pamela Liebman, chief executive and president of the Corcoran Group. "Part of it was the anticipation of the Wall Street bonuses, part of it was the feeling that there was some opportunity to buy and negotiate."
The market watchers also point to other optimistic signs: a handful of sales of more than $10 million that have gone into contract but not yet closed, and that are not reflected in the current data. And they note that the current market numbers do not include dozens of sales in new buildings that went to contract this fall but will not be reflected in sales statistics for a year or more, until buildings are completed and the sales close.
Gregory Heym, chief economist for Brown Harris Stevens and Halstead, attributed the decline in the average sale price in his study to the declining share of sales of large apartments in the last six months, and the increasing share of lower-priced studios and one-bedrooms.
"The only thing holding prices back is the fact that mix has changed," he said.
In his study, for instance, sales of studio and one-bedroom apartments accounted for 61 percent of all sales, up from 55 percent in the fourth quarter a year earlier.
And the Corcoran study, which recorded the largest decline in overall average sales, prices of one- and two-bedroom apartments actually rose, while those of studios and large apartments of three bedrooms or more fell.
The inventory of unsold co-ops and condos on the market also rose again in the last quarter, often a sign of a weakening market. Yet the increase, 3.5 percent to 5,964 listings, was only modest, compared with the 16 percent increase from the second to third quarter, according to Mr. Miller. The average number of days an apartment was on the market rose by four days, from 133 to 137.
The inventory listings at the end of this quarter, 5,964, were far above the level reported a year earlier, when only 3,922 apartments were listed. Mr. Miller said inventory at the end of 2004 was the lowest in more than four years and marked the start of a large run-up in prices, and worries about a market bubble.
But he said the current inventory levels were below those found several years ago, and closer to balance between buyers and sellers.
Wednesday, January 04, 2006