Diane M. Ramirez
Gregory J. Heym
Executive Vice President, Chief Economist
By JOSH BARBANEL
Manhattan apartment sales fell sharply and prices slipped in the fourth quarter, but brokers remained undaunted and predicted that a boost in buyers' confidence would stabilize the market in 2012.
Manhattan sales declined 12.4% in the fourth quarter from the year-earlier period, falling to the lowest level since the summer of 2009, according to a market report to be released Wednesday by Prudential Douglas Elliman. Sales were off more than 35% from strong sales in the third quarter.
But brokers—who quarter after quarter tend to see the glass as half full—viewed the slippage as aberrational, the result of a rise in economic uncertainty in the second half of last year before the stock market recovered.
"We are getting back to a healthy ebb and flow in our market," said Diane Ramirez, the president of Halstead Property.
Pamela Liebman, the president of the Corcoran Group, said that while activity sagged in the second half of last year, "there was a very big return in buyer confidence in 2011."
The deepest declines were in sales of new condominiums, which fell 27% from the same quarter a year earlier, and 45% from the previous quarter.
The median apartment price was off by 6.2% to $855,000, according to the Elliman report, with a drop in the median co-op price partially offset by an increase in the price of new condominiums.
The report put the average price of a Manhattan apartment in the fourth quarter of 2011 at $1.445 million.
The declines came as a bit of a surprise at a time when sales of trophy apartments costing $20 million or more remained strong.
Real-estate brokers noted that the supply of apartments on the market had been shrinking, especially for new condominiums, which showed the fewest listings on the market in several years.
Hall Willkie, the president of Brown Harris Stevens, said that the Manhattan market "continues to outperform the rest of the nation."
"I don't see distress at all," he said. "If you build a good product and you price it with some justification, it will sell."
Even the sharp decline in condominium sales was viewed as positive: an indication that the supply of new condominiums was declining, despite the fears of a large "shadow inventory" of new apartments that weren't officially listed on the market.
Since the financial crisis of 2008, some developments were converted to rentals, others were abandoned, and new condominium sales have been strong in some neighborhoods. Now Ms. Liebman said she expected to see spot price increases next year in some neighborhoods.
Jonathan Miller, an appraiser with Miller Samuel Inc., who prepared the Elliman report said, that so far new condo prices weren't rising, even though much of the shadow inventory has disappeared. He attributed the decline in condo sales to "the mismatch of supply and demand" in Manhattan.
The case for a strengthening market, despite the dismal sales figures, is based on the idea that the market stalled because of temporary factors: a stock market shock in the third quarter and a slowdown of the pace of recovery in New York City.
Gregory J. Heym, an economist who prepared quarterly market reports for Halstead and Brown Harris Stevens, said that despite fears of layoffs on Wall Street, finance employment was up slightly during the first 11 months of the year, and any fall in Wall Street bonuses was unlikely to stall sales.
"Things are looking good," he said. "We still have things to worry about, but they are a lot less than they were three years ago."
But Daniel Alpert, a managing partner at Westwood Capital, who closely follows the housing market, said that there were many risks to the New York real-estate market that could further drive down prices.
He said he expects deep cuts in Wall Street bonuses, and that a recession in Europe would slow growth here and around the world, and hurt the Manhattan market.
"I don't think we have actually seen the bottom yet," he said.
Wednesday, January 04, 2012