Gregory J. Heym
Executive Vice President, Chief Economist
BY RANDI F. MARSHALL
Newsday Staff Writer
The average price of a Manhattan apartment fell in the second quarter of 2006 compared with the same period last year, hovering around $1.2million, three large real estate agencies reported yesterday.
Occurring at the height of the spring market, that decline could be an indication of a slowing real estate market, especially because it's combined with significant increases in inventory and declines in the number of sales.
But a fourth report found otherwise: Real estate appraiser Jonathan Miller showed that Manhattan apartment prices, on average, had actually increased, to nearly $1.4 million. Miller, with Miller Samuel, also reported gains in two other key indicators: average price per square foot ($1,083) and median home price ($880,000).
The disparity seems to point to the difficulty of analyzing and predicting a real estate market that is neither booming nor busting, experts said. What's more, the Manhattan market is complicated by cooperative apartment sales data that aren't as publicly available, noted Gregory Heym, the chief economist for Terra Holdings. It is the parent of Brown Harris Stevens and Halstead Property LLC, two of the agencies that reported average price declines.
Even as Heym's reports found a decline in average price, they showed modest gains in median price, up 3.4 percent to $755,000, and price per square foot, now at $999 - a 3.8 percent gain.
"If you had told people a year ago that the median price would be higher this year, they probably wouldn't have believed you," Heym said. "This is about finding your way through a healthier market."
But that finding doesn't mean the real estate market is suddenly full of vigor. Even the price gains reported by Miller, who conducts his research for the Prudential Douglas Elliman real estate company, are not considered signs of sudden renewed strength in the local real estate market, especially because it's just one quarter of the data.
"I don't think this is an indication of a long-term trend," Miller said. "I think it's somewhat of an anomaly."
Indeed, the truth of the Manhattan real estate market is likely somewhere in the middle of these results, especially with factors beyond the market at work, experts said.
For instance, the average price declines may be partly due to a large number of new condominium buildings consisting largely of studio and one-bedroom apartments - which generally cost less than two- and three-bedroom apartments, according to Pamela Liebman, chief executive of The Corcoran Group, which issued the third market report yesterday showing an average price decline. The last time Corcoran saw an over-the-year price decline was in the second quarter of 2003, Liebman said.
Even with particular sales affecting the quarter's data, price gains have slowed, demand is softer and inventory is higher, Liebman said. And long-term mortgage rates have risen by a full percentage point in the past year. Liebman noted that some apartment searchers who wanted to buy a one-bedroom are now choosing to rent instead. Rents rose by 15 percent on average, to $3,970, Corcoran reported.
"We still have pretty significant prices, and that, combined with interest rates' being so much higher, means that ... you have buyers who can't afford to buy right now," Liebman said.
Supply is relatively high - with listings in Manhattan up 54 percent over a year ago, Miller said. The number of closed sales, meanwhile, declined by nearly 15 percent. Interestingly, while condominiums are outselling cooperatives in terms of numbers, co-op prices are increasing faster than those for condos, in part because of the sale of so many more small condo apartments.
"I think we're pretty fortunate here," said Dorothy Herman, chief executive of Prudential Douglas Elliman. "The city has more inventory, but you still have the incomes to support it."
That may not be as true on Long Island, Herman said, adding that wages on the Island are not gaining as much ground. Long Island's inventory remains up about 50 percent over the year, and median prices rose just 4.8 percent in Suffolk County, to $395,000, and 2.2 percent in Nassau, to $478,500.
"I'm a little more concerned on Long Island," Herman said. "You have to keep your eye on it."
New York City's market may also stay level because supply isn't expected to continue its steep upward trend. Heym noted that new listings in the second quarter declined from a year ago.
The complexities now, however, mean it's difficult to predict the future of the overall market. Instead, many experts say the market may vary by location, price range and a host of other factors.
"When you have a flat market, it doesn't mean that every property, every neighborhood or every town is flat," Miller said. "It means that some are up and some are down."
Copyright 2006 Newsday Inc.
Thursday, July 06, 2006