Gregory J. Heym
Executive Vice President, Chief Economist
BY TAMI LUHBY
Rising energy prices, higher mortgage rates and the persistent talk of the housing bubble's end dampened Manhattan apartment buyers' appetite last quarter. Apartment prices in the borough barely increased in another sign that the red-hot housing market is cooling.
Also, fewer buyers snapped up properties, increasing the number of available apartments on the market and the time it took each to sell, according to Prudential Douglas Elliman's Manhattan Market Outlook report, to be released Wednesday. The fourth quarter is traditionally the slowest selling season.
"Buyers became nervous," said Jonathan Miller, chief executive of the appraisal firm Miller Samuel, which prepared the report. "People are waiting to see what's going to happen."
The median sales price nudged up a scant 1.3 percent to $760,000, compared to the previous quarter. This is a far cry from the double-digit jumps of recent years. Experts predict sellers will no longer enjoy increases such as the 25.6 percent hike in prices seen between the fourth quarter of 2005 and the same period a year earlier.
Meanwhile, fourth-quarter sales dropped 21.2 percent from the previous quarter and 27.2 percent from a year ago. It took on average 137 days to sell an apartment, four days longer than in the third quarter and 41 days longer than in the last three months of 2004. The number of unsold units stood at 5,964, up 3.5 percent from the previous quarter and 52.1 percent from the previous year.
Halstead Property, both sales companies owned by Terra Holdings, showed an even greater slowdown in the rate of price appreciation. The reports found that the median price of a Manhattan apartment increased by 4 percent during last year, to $699,000.
"The days of 30 percent annual increases are behind us," said Gregory Heym, Terra Holdings' chief economist.
The cooling is actually healthy for the overall market, said Hall Willkie, president of Brown Harris Stevens. Now, buyers and sellers each have a little leverage.
Smaller apartments -- studios and one-bedrooms -- are grabbing a larger share of the market, Heym said. That's because they appeal more to first-time home buyers, who are more rate-sensitive and are trying to close deals before rates go up even more.
The first half of 2006 may prove rosier if Wall Street executives pour their record bonuses into the market, as is typical. The luxury market is already seeing an increase in transactions, Miller said.
Wednesday, January 04, 2006