Gregory J. Heym
Executive Vice President, Chief Economist
Reports show prices both up and down, but inventory has grown, and buyers now have more bargaining power
BY RANDI F. MARSHALL
Talk about uncertainty.
Depending on whose analysis you listen to, Manhattan's average residential real estate prices could be as strong as 12 percent above last year's levels or as weak as 4 percent below.
That's quite a disparity, but among the three sets of data being released today by top Manhattan real estate agencies, there are also some fundamental similarities. Inventory continues to be above last year's levels, properties are taking longer to sell, and if you're a buyer, there's slightly more room to negotiate.
Certainly, those signs point to a slowing market. But compared with properties in the rest of the nation - and, locally, those on Long Island - Manhattan real estate appears relatively stable, experts said.
"When you compare it to what we've been programmed with for the last five years, it's definitely a weaker market," said Jonathan Miller, a partner with appraiser Miller Samuel, which issued a report for Prudential Douglas Elliman today. "But it's really in neutral."
The Prudential Douglas Elliman report, which portrays a market with increased sales and stabilizing inventory, indicates that Manhattan's average sales price in the third quarter rose 12.1 percent year-over-year, to $1.29 million. The inventory of listings, though still above last year's levels, dropped slightly from the second quarter - the first drop after six quarterly gains.
Nonetheless, the time an apartment was on the market is still up - to 150 days, compared with 133 days a year ago, according to Prudential's report.
Prudential and The Corcoran Group show about the same gain in average price per square foot - between 6 percent and 7 percent, to about $1,050. The two companies show similar gains in median prices, too, now hovering around $845,000 to $850,000, depending on the study.
Some of the findings in the reports differ significantly, however. Corcoran's average sales price increased just 3 percent over the year, to $1.24 million, and its number of sales declined 17 percent.
The third report, by Terra Holdings, owner of Brown Harris Stevens and Halstead Property, shows a 4 percent decline year-over-year in the third quarter's average sales price, to $1.09 million. Halstead's median price, meanwhile, was up 1 percent over the year, to $733,900.
Terra Holdings chief economist Gregory Heym suggested the decline in average prices was due in part to more smaller apartments being sold.
"I think the market will be more stable than most people anticipate," Heym said.
There's a disparity, however, between condominium and cooperative sales, the reports show. New construction is almost entirely condos, leading to a nearly 70 percent increase in condo inventory from a year ago, Miller said. Co-op inventory increased by roughly 7 percent, he added.
That, said David Michonski of Coldwell Banker Hunt Kennedy has led to an oversupply of new condominium units.
"It's your classic overbuilding situation that's going to take another 12 to 14 months to work off," Michonski said, arguing that Manhattan "market weakness" could remain for another six months.
That may mean tough times ahead for developers starting new residential projects. "What's going to happen down the road is some [projects] will survive and some [builders] are already deciding not to do it," said Dorothy Herman, chief executive of Prudential Douglas Elliman.
Right now, buyers don't feel pressured to make a deal, and that's slowing sales. "We can't sell every apartment we put on the market in a bidding war in the first week," Corcoran chief executive Pamela Liebman said. "It's a more natural cycle, but they will sell."
Wednesday, October 04, 2006