Gregory J. Heym
Executive Vice President, Chief Economist
Exec. Vice President
Park Avenue Office
Market stayed tough for brokers from summer into fall
By Tom Acitelli
Unsold Manhattan apartment numbers started dropping this past summer as sellers who once hoped to cash in on the sales boom pulled their properties off the market. Average apartment prices also dipped over the summer, though prices showed some strengthening at the end of the season.
After rising for many months, the number of co-ops, condos and townhouses on the market in Manhattan decreased 3.6 percent from June through August, according to appraisal firm Miller Samuel.
"On the positive side, you could perhaps infer that the pace of inventory rising is not what it was a couple of months ago," said Miller Samuel CEO Jonathan Miller.
Inventory edged down from 8,071 units on the market in June to 7,784 by the start of September.
But that's still high -- above the all-time record of 7,604 units on the market during the second quarter.
Miller also said the recent dip may be deceiving.
Co-op inventory dropped by 12 percent over the summer, easing the glut in that segment of the market. But the number of condos and townhouses on the market was still rising -- up 5 and 9 percent, respectively, from June through August.
Miller said the drop in co-op inventory could be due to sellers who hoped to cash in on the housing boom pulling their apartments off the market.
Sellers who have decided they still want to unload their apartments face lower prices.
In June, the average sales price of a Manhattan apartment stood at more than $1.3 million, according to Halstead Property. By the end of August, it was close to $1.2 million, a 7.9 percent drop. The median Manhattan sales price also dropped from June through August, dipping 5.4 percent from $799,000 to $755,250.
But the Halstead report did note a 4.6 percent average sales price jump from July to August, and a median sales price increase from $747,750 to $755,250.
Still, August's numbers were worse than the June figures for brokers. Gauging the Manhattan residential market month to month may be difficult, but the figures jibe with broker anecdotes of a weakening climate marked by reductions in asking prices.
In August, Zoya Litinetskaya and Adam Trese, brokers at Halstead Property, closed on a deal for the seller of a 600-square-foot one-bedroom with exposed brick and two decorative fireplaces in an East Village co-op. It took 19 weeks to sell it, and the brokers got the $575,000 asking price -- after lowering it twice.
"We were going to lower it some more," Trese said, "but we stuck to our guns because the summer was tough."
Last summer, Trese sold a similar unit in the same co-op after one open house.
Dorothy Somekh, another broker with Halstead, spent six months trying to sell a co-op at 311 East 38th Street. The seller originally wanted $829,000 for the 780-square-foot one-bedroom with more than 200 square feet of terraces. "The problem," Somekh said, "was that the owner was asking a very high price, a price from a year before. We convinced her to come down."
The seller slashed it to $795,000.
Still, no buyers. "Everyone would look at it," Somekh said, "and say, 'It's nice, but it just didn't cut it.'"
Her client slashed the price further. "She was starting to get really nervous," Somekh said. "She called me and said, 'What would it take to sell this? I can't wait anymore.'"
Somekh told her to chop the price to $750,000, nearly $80,000 less than the original asking price. The apartment sold quickly in August.
Such broker horror stories saturated the recently departed summer. The deals did close in Manhattan, just not at nearly the clip of the summer of 2005, or even of the beginning of 2006. The number of apartment sales in Manhattan dropped from the first quarter of the year through the second, according to Miller Samuel. The 1,934 sales recorded at the time was the lowest second-quarter level of apartment sales in five years.
Barbara Kessler, a broker with Bellmarc Realty, talked of an August of sales, but also of headaches.
She sold an 800-square-foot one-bedroom condo in Murray Hill for $680,000. Her client, the seller, was asking $675,000. The condo "went fairly quickly," she said. Another one of her August deals was a tad tougher.
A two-bedroom Upper East Side co-op unit, completely renovated, closed for $1.04 million. The seller was asking nearly $1.1 million.
"All the sellers," Kessler said, "want asking."
Sunday, October 15, 2006