Halstead Property

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

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

Slow Sales Lower Prices Manhattan Real Estate's Reality

By Dawn Wotapka   

Of DOW JONES NEWSWIRES

New Yorkers perhaps are growing accustomed to the new real estate reality - after years of outrageous prices and bidding wars, the market is drifting back down to earth.

The latest round of market reports released Thursday show that Manhattan's residential sales remain depressed in the second quarter. Closings decreased by as much as 60% from a year earlier. No market segment or neighborhood has been immune, with median prices shaved in every bedroom category, according The Corcoran Group and PropertyShark.com.

The reasons are old news: unemployment, less money for the free-spending Wall Street bonus crowd - following last fall's financial sector meltdown, and continued tightness in the mortgage market.

"It is no secret that, since 3Q 2008, Manhattan's housing market has experienced one of its most challenging periods in 20 years," noted Pamela Liebman, Corcoran's chief executive. "In terms of reflecting the recession's initial impact, this quarter and the next will be the most telling in terms of establishing a new level of pricing for Manhattan."

So far, it is lower: Halstead Property reports the median apartment price declined 19% from a year ago to $795,000, the lowest median price in two years. Apartments, meanwhile, are sitting on the market for an average 129 days, nearly 50% longer than this same time a year ago. In the upper end, co-op closings topping $10 million plunged by 82%. That, along with smaller units contributing more to overall sales, rippled across the market with the average price tumbling 29%.

That might be bad news for sellers, but it is a welcome change to buyers long unable to afford one of the nation's priciest markets. Brokers say traffic is elevated at open houses and as well as on Web sites, aided by a federal tax credit for qualified first-time buyers before Dec. 1.

With a multi-month lag typical between the contract signing and the closing table, it could be several months before reports substantiate "evidence that is now only anecdotal," says PropertyShark.com founder Matthew Haines.

Even so, real-estate Web site StreetEasy.com reports 2,477 listings made it to contracts inked in the second quarter, up 82.4% from the previous quarter. And, though inventory levels remain elevated from a year ago, the count has been whittled down since peaking in mid-May.

As buyers leave the sidelines, inventory will continue to decrease, and price stability could return to the market within the next few quarters.

Of course, as Sofia Kim, StreetEasy's vice president of research, pointed out: "What remains to be seen is how much of this increased activity is because of the seasonal nature of the real estate market, and how much of this is due to a true rebound in buyer confidence."  

Thursday, July 02, 2009