Gregory J. Heym
Executive Vice President, Chief Economist
By ELIZABETH A. HARRIS
The 2009 Manhattan real estate market ended on a better note than it began, according to fourth-quarter reports that were to be released Tuesday by the city’s largest brokerages.
The improvements in the market that began over the summer pushed through to the end of the year. Most reports found that sales increased from the third quarter to the fourth, which helped eat away at the inventory of unsold apartments. Prices, meanwhile, stayed about flat — some of the reports showed slight increases, but most showed small declines.
“Considering where we came from, the results this quarter were much better than we could’ve imagined a year ago at this time,” said Jonathan J. Miller, president of the appraisal firm Miller Samuel, who prepares the market report for Prudential Douglas Elliman. “There are a lot of challenges ahead for housing, but I think the worst is behind us.”
Dottie Herman, president of Prudential Douglas Elliman, said that in the first half of 2009, apartment sales were low. “People were thinking, If I buy this, will the market go down more?” Ms. Herman said. “You don’t have that any more. People feel the market has pretty much bottomed out.”
The Prudential report showed that the median sale price in Manhattan was $810,000 in the fourth quarter of 2009, a 10 percent drop over the same period in 2008 and a 4.7 percent decline over the third quarter of 2009. The average sale price, $1.296 million, was down 2.1 percent since last summer and 12.7 percent since the fourth quarter of last year.
Real estate sales figures usually represent contracts signed several months earlier. Mr. Miller said that the median sale price of $810,000 in Manhattan was down 21 percent from the peak of $1.025 million in the second quarter of 2008. The average sale price of nearly $1.3 million last quarter was 24.8 percent lower than the peak of $1.72 million in the first quarter of 2008. Prudential said the number of sales increased 10.9 percent from the third quarter to the fourth last year, and they were 8.4 percent higher than in the fourth quarter of 2008.
It was unusual to have such an active fourth quarter, which includes many holidays. “Over the last couple of years, prices leveled off and activity went down sharply in the fourth quarter,” said Gregory J. Heym, chief economist at Terra Holdings, who prepares reports for Halstead Property and Brown Harris Stevens. “That hasn’t happened” in 2009.
“It’s unusual to see this kind of strength continuing in the fourth quarter,” Mr. Heym added.
Inventory has been reduced by the rise in sales that started in the summer. That is unusual because the busiest time for sales in the city is usually the spring. The Prudential report found that inventory had fallen 18.3 percent since the third quarter of 2009 and 24.6 percent since the fourth quarter of last year.
Inventory is now 6,851 listings, just shy of the 10-year quarterly average of 7,094, Mr. Miller said. Some of the decline in inventory, however, is seasonal. Sellers often pull their homes off the market before the holidays and put them back on in the new year. Those owners might be joined by many others who have sat on the sidelines for the last year or so, hoping to wait out the economic storm.
But even with willing buyers and sellers, there is a third party to consider: the banks.
Lending remains extremely tight, especially for “jumbo” mortgages, those above $729,750. In Manhattan, these represent a much larger part of the market than in most parts of the country.
“It’s still a struggle,” said Pam Liebman, president of the Corcoran Group. “The inflexibility of the jumbo mortgage market does continue to kill some deals out there.”
But for anyone who can get a mortgage, rates are still low. They have nowhere to go but up, and this year, some economists say, they are likely to rise, which could put some downward pressure on the market. High unemployment and concerns about commercial real estate foreclosures could play a part as well.
“There are a lot of concern in the economy,” said Mr. Heym of Terra Holdings. “We want to see jobs added again; it’s hard to know what a bunch of commercial foreclosures would mean. I think we’re at a state where things are getting better; it’s just going to be a slow recovery.”
Monday, January 04, 2010