Gregory J. Heym
Executive Vice President, Chief Economist
By JOSH BARBANEL
Hard times have come to the Manhattan real estate market, according to a series of quarterly sales reports to be issued on Thursday.
Relatively few apartments are selling, and when they do, prices are down 20 percent or more from a year ago. Large, luxurious apartments on Fifth Avenue, Park Avenue and Central Park West, and new condominiums with many unsold apartments, have been particularly hard hit.
One report, prepared by two brokerage firms, Brown Harris Stevens and Halstead Property, showed the number of closings of condos and co-ops down by 58 percent in the first quarter of 2009, compared with the same period a year earlier, as buyers were scared off by worries over the economy, portfolio losses and fears that apartment prices would continue to fall in the months ahead.
The drop in sales was worse than the decline in the auto industry. In March, sales at General Motors were off 45 percent from March 2008.
The report showed that average condo and co-op apartment prices were down 11 percent from the first quarter of last year, to $1.5 million. Co-op prices were off 27 percent, to $975,000, and condominium prices down by 4 percent. but were up from the last quarter, as buyers continued to close on new condominiums for which contracts were signed many months ago.
The number of sales of apartments over $10 million plummeted, by 87 percent, compared with a year ago, when sales of apartments at some of the city’s most expensive condominiums, at 15 Central Park West and at the Plaza Hotel, were completed, the report said.
Only one co-op closed for more than $20 million, compared with eight in the same quarter a year ago.
Although details in the various reports differed — one put the decline in sales at 52 percent and another at 48 percent — they suggested a market still traumatized by a collapse in confidence last fall after the bankruptcy of Lehman Brothers, even as sales have begun to stabilize in far more troubled real estate markets in the West.
“Consumer confidence is the killer,” said Dottie Herman, president of the Prudential Douglas Elliman brokerage firm. “People are scared. They have never seen anything like this.”
Jonathan Miller, an appraiser who prepares the market report for Prudential Douglas Elliman, said he has tracked a series of statistics on inventory over the last decade that show the market declining more steeply than ever before.
The number of apartments on the market, 10,445, was 34 percent above the inventory level a year ago, he said, and 15 percent above the inventory last quarter.
The average number of days that apartments stayed on the market had increased to a record 170, nearly half a year, up 16.5 percent from the first quarter last year and 7 percent from the last quarter. And when buyers did sign contracts, they got a discount of 12 percent from the most recent listed asking price, up from 7.3 percent from the fourth quarter of 2008.
The Elliman report showed that average and median sales prices for all co-ops and condos were up a bit from a year ago, but Mr. Miller said the figures were distorted by closings of expensive new condominiums (even though few contracts for new condominiums are currently being signed).
He said a more significant figure was the sale price of existing co-op and condominium apartments, which was down 20.9 percent, to $732,000, since the first quarter of last year.
Hall F. Willkie, the president of Brown Harris Stevens, said that despite the declines, there were some positive signs. Activity has picked up in each of the last few months, he said, with the number of active buyers and the number of contracts signed rising.
But Pam Liebman, the president of the Corcoran Group, which also issued a report, predicted that as activity picks up, prices will erode even more. While sales of the most expensive apartments and apartments in new condos are down sharply, she said that sales were increasing among lower-priced apartments.
She said sales of one-bedrooms and studios were up, as were sales to first-time buyers, who can purchase an apartment without having to sell something else.
“Manhattan has become affordable again,” she said. “It is a lot more affordable than it was six months ago.”
Thursday, April 02, 2009