Diane M. Ramirez
Gregory J. Heym
Executive Vice President, Chief Economist
By MICHELLE HIGGINS
Manhattan apartment sales rose in the third quarter of 2012 to the highest level since the financial crisis began, despite low inventory, as demand and consumer confidence strengthened, according to reports that will be released by New York City’s major brokerage firms on Tuesday.
Prices were essentially flat, with some reports showing slight increases and others showing no change or a slight decrease.
But the number of Manhattan apartment sales in the third quarter rose to 2,790, up 12 percent from a year ago and the highest quarterly total since the collapse of Lehman Brothers in 2008, according to reports by Brown Harris Stevens and Halstead Property. The Corcoran Group reported a 17 percent jump in sales to 3,821 for the same period.
“It’s all about consumer confidence coming back,” said Diane M. Ramirez, president of Halstead Property. “New York has so shown its true grit,” as a place that can sustain “almost whatever comes at it,” she added, “so where else to put your money?”
One agency’s report, however, showed sales were down. Prudential Douglas Elliman reported sales volume dropped 5 percent from a year ago. Still, the report showed that the summer months had more momentum, with the number of homes going into contract up 4.9 percent compared with last summer.
Even as the volume of sales picked up, inventory hit a seven and a half year low with 5,847 available listings in the third quarter, down 24.3 percent from the same period a year ago, according to the Elliman report.
Low equity is keeping sellers from listing, said Jonathan J. Miller, the president of the appraisal firm Miller Samuel and the author of Prudential Douglas Elliman’s report. “Those sellers can’t become buyers because of tight credit,” Mr. Miller said. The approaching election and “concern about the direction of the national economy” is also contributing to sellers’ hesitation to list apartments, he added.
“We’re hitting a point where it’s getting critical,” Mr. Miller said, adding that if inventory continues to be tight, “you’re going to see the prices edge higher.”
Already, brokers say, apartments that are well priced are selling quickly and in some cases prompting bidding wars.
“There’s lots of competition for too few apartments,” said Pamela Liebman, chief executive officer of the Corcoran Group. While it is not the kind of bidding wars that were common in the heady days of 2007, she noted, many buyers are frustrated by the lack of inventory and realize that “if they don’t move quickly on new listings, they won’t be there very long.”
Overall inventory is not expected to loosen up, at least in the immediate future. “We’ll see a few exciting new developments hit the market in the next few months,” Ms. Liebman said, “but not enough really to move the needle.”
The inventory pipeline should start to pick up more significantly over the next 12 to 18 months, she noted. For now, as she put it, “It’s a good market, it’s just the inventory is terrible.”
While the market’s recovery in previous quarters was driven by luxury sales, the latest activity was weighted toward smaller apartments and first-time buyers taking advantage of low mortgage rates.
“The lower end is coming into fruition now,” said Dottie Herman, the chief executive of Prudential Douglas Elliman, which showed in its report that one-bedroom apartments accounted for the bulk of the third-quarter sales at 37.8 percent.
The rise in one-bedroom sales pulled the market’s median price down 2.3 percent in the third quarter, to $890,000, according to Elliman. The Corcoran Group said the median price was even from both last quarter and last year at $850,000, while reports by Brown Harris Stevens and Halstead Property showed an increase of 2 percent from last year to $865,525.
At the high end of the market, the average price dropped 4 percent to $1,377,630, as the sales pace slowed, according to Brown Harris Stevens and Halstead Property. The number of apartments selling for $5 million or more were down 12 percent from the third quarter of 2011, and sales of apartments for $20 million or more fell to three from seven in the same period.
Tuesday, October 02, 2012