Gregory J. Heym
Executive Vice President, Chief Economist
By Ilaina Jonas
Manhattan apartment prices soared in the first quarter, but sales fell and inventory rose under the weight of tighter mortgage terms and Wall Street job fears, according to several reports.
The median sales price rose 13.2 percent to a record $945,276 over the prior-year quarter, while the average sales price increased 33.5 percent to a record $1,722,991, according to the Prudential Douglas Elliman Manhattan Market Overview quarterly report released on Wednesday.
"The market is leaning much more to the higher end and part of that comes from what's gone on in the mortgage markets," said Greg Heym, executive vice president of research for Terra Holdings, parent company of real estate firms Brown Harris Stevens and Halstead Property.
"In the mid- to lower-price stuff you see fewer sales in these categories because those are the people affected by tighter standards," Heym said.
The Manhattan housing market has been insulated from the U.S. housing crisis that has sent the national median sales price of an existing home down 8.2 percent to $195,900. New home prices have fallen even further.
However, soaring mortgage defaults nationwide set off a broader credit crisis that could put more than 25,000 New York jobs in the financial sector - which drives the local real estate market -- at risk.
"When a market is on such solid footing as ours was, it cannot fall apart in a span of a couple of months. It's going to take longer than that. You're going to have to see more layoffs actually happening," Heym said. "Until people are forced to sell their apartment for whatever they can get for them, that's the missing ingredient in a downturn."
So far it hasn't.
The average price per square foot leaped 20.5 percent to a record $1,289, according to the Prudential report.
Halstead Property said the average price rose 47 percent over the first quarter 2007 to $1,690,995, driven by sales of apartment priced over $10 million.
"There were 84 sales in between 15 Central Park West and The Plaza and the effect that that has on all these number is tremendous," Heym said.
Some of the apartment sold during the quarter -- including those at 15 Central Park West and The Plaza -- reflect deals that had been agreed to in previous years.
The median sales price rose 13 percent, Halstead said. Although sales at ultra luxury projects 15 Central Park West and The Plaza skewed the results, prices still set records or near records even after removing those deals. Without the two projects the average price would have been $1,417,496, Halstead said.
THE BOOM IS OFF THE HIGHRISE
Yet the pace of sales slowed and the number of homes on the market rose for the first time since the housing boom started about four years ago, Herman said.
"That's the story -- sales and inventory this quarter," said Jonathan Miller, author of the Prudential report.
The number of sales fell 1 percent, according to Halstead. It had about 600 more sales in its statistical pool than Prudential, which said the number fell 34.3 percent this quarter to 2,282 units. It was the largest drop since Miller began compiling the report in 1989.
"These numbers reflect what happen with the mortgage fiasco," and do not reflect the layoffs that have yet to happen, said Dottie Herman, Prudential CEO.
"People have no sense of urgency, and you're in a much more price sensitive time now," she said. "There's a lot of uncertainty."
The number of homes on the market rose 4.6 percent to 6,194 from last year, Prudential said. Homes for sale remained on the market for 146 days, two weeks longer than a year earlier, according to the Prudential report.
Wiggle room on prices remained about the same as last year, about a 3.2 percent discount from the asking price, according to the Prudential report.
"It's not a buyers' market yet, but the pendulum has switched to the buyers now," Corcoran Group Chief Executive Officer Pam Liebman said.
The Corcoran Group said the average price jumped 19 percent to $1.626 million, while the median rose 9 percent to $917,000. The price per square foot was up 16 percent to $1,224. Inventory of homes for sale was up 15 percent at the end of March.
Wednesday, April 02, 2008