Halstead Property

Diane M. Ramirez
President
dramirez@halstead.com
(212) 381-3203

Gregory J. Heym
Executive Vice President, Chief Economist
(212) 546-1069

City Home Sales Hit Speed Bump

By JOSH BARBANEL
The Manhattan co-op and condo market hit a speed bump in the first quarter of the year as median prices fell and several market reports showed a drop in sales.

It's a big turnabout from a year ago, when the home market was rebounding from the depths of the financial crisis. Now, with credit still tight, sales have cooled—particularly among less luxurious, lower-priced apartments.

The median price of a Manhattan apartment was $782,071 last quarter, down 9.9% from the same quarter in 2010, according to a report released Friday by Prudential Douglas Elliman. It was off 7.2% from the fourth quarter.

That price was the lowest median price since the end of 2006. It's off 23.7% from the peak price of $1.025 million in the spring of 2008.

Prices surged in the first quarter of 2010 because of pent-up demand from buyers too scared to buy during the recession, brokers and analysts said. A now-expired federal tax credit also goosed the market.

The Manhattan market weakened in the final months of last year. That trend continued in the first-quarter reports.

Still, brokers and analysts said the market is poised to begin climbing again.

They pointed to tight supplies of inventory for sale, especially among the most expensive apartments, and an increase in contracts signed as indicators that the Manhattan market remains essentially stable, and isn't tumbling into a double-dip in housing prices.

"If you take these reports and make a low bid you won't be successful," said Pamela Liebman, the president of the Corcoran Group, which issued its own report. "We are likely to see some increase in prices next quarter unless a lot more inventory comes on the market. "

Dottie Herman, president of Prudential Douglas Elliman, said the Manhattan market lacked "a buzz" and a sense of excitement that she felt at this time last year, and could benefit from easier access to credit. Still, she said the market was "a different world than the rest of the country."

She added, "I am embarrassed when I talk to my friends across the country, because real estate in New York has held up so well."

The market reports all are based on sales that closed during the first quarter, but they often disagree on conclusions because they have differing methodologies.

Two found steep declines in sales compared to the same quarter a year ago. Reports by Brown Harris Stevens and Halstead put the decline at 23%, while another by Streeteasy.com put the decline at 27%.

Two others, by Douglas Elliman and the Corcoran Group, reported that sales were flat or up slightly from the same quarter a year ago. Both these reports included private information on closed sales in the first quarter that have yet to be officially recorded.

Jonathan Miller, president of Miller Samuel, who prepared the Elliman report, said he concluded that the "market was overall stable." He said it had been driven up and driven down by the effects of the federal tax credit.

He said that the possibility of a "double dip" in Manhattan appears to be remote, as Wall Street compensation was up 5% last year and inventory is relatively tight.

Mr. Miller said that co-ops, which usually sell for less than similar condominiums, made up a larger share of the market in the last quarter, driving down median prices. He found the median sale price on a co-op was down 6.2% to $642,500, while the median sale of a condominium rose 8% to $1.15 million.

The median price in new developments hit $1.34 million, a 15.5% increase from a year earlier.

Friday, April 01, 2011