The volume of Manhattan home sales declined at least 12 percent in the fourth quarter of 2011, although prices continued to hold steady, according to quarterly reports issued today by the city’s largest residential real estate brokerages.
Experts proffered a host of explanations for the drop in sales activity, from global economic chaos to low inventory levels to financing issues for buyers in the middle of the market.
In the last quarter, sales of Manhattan co-ops and condominiums fell to 2,011, down 12.4 percent over the same period in 2010 and 35.3 percent over the previous quarter, according to a report from Prudential Douglas Elliman, while pending sales dropped 8.1 percent from the same period last year.
The Corcoran Group reported 2,600 Manhattan residential sales, a 12 percent drop over last year and the lowest level of activity since the second quarter of 2009. Brown Harris Stevens, which releases the same data as its sister company, Halstead Property, shows 1,645 closings in the last quarter, a 13 percent drop. Listings aggregator Streeteasy.com said closings were down 18.9 percent.
However, as The Real Deal previewed in the January issue, prices remained stable, with the median sale price rising a modest 1.2 percent, to $855,000 from $845,000, and the average price per square foot increasing 5.6 percent, to $1,117 from $1,058, over the prior year, the Elliman report says.
Other brokerages came up with somewhat bleaker year-over-year numbers. According to Corcoran, the median price dropped 5 percent, to $795,000 from $841,000, while the price per square foot fell 1 percent, to $1,044 from $1,056. BHS said the median price dropped 6.5 percent to $785,000 from $840,000.
Consistent with seasonal trends, prices were about 6 percent lower in the fourth quarter than the third quarter, the Elliman and Corcoran reports say.
In the fourth quarter of 2011, homes averaged 130 days on the market, up slightly from 125 days last year, the Elliman report says. Properties sold at a smaller discount in the fourth quarter of 2011: 4.9 percent off the listing price, compared to 8 percent in fourth-quarter 2010, the report says.
But the slump in closings is not evidence of a long-term slide in activity, experts say. “That, to me, isn’t telling of a trend,” said Jonathan Miller, president and CEO of Miller Samuel and the author of the Elliman report. “We just saw a little bit of volatility in the second half of 2011, in terms of sales.”
Additionally, the reports track fourth-quarter closings, reflecting contracts signed several months ago, noted Dottie Herman, the president of Elliman. At the time, the country was reeling from the Congressional debate over the debt ceiling, a downgrade of U.S. sovereign debt, weak job numbers, a roller coaster stock market, and the escalating European debt crisis.
“A lot of that played more to confidence than anything, but I think it still had an effect,” said Gregory Heym, chief economist for Terra Holdings, parent company of BHS and Halstead.
“We had a big decline in the number of condo closings,” Heym added, “which is making some of the numbers look worse than they are.
Sales of condo units, which are typically more expensive than co-op apartments, accounted for only 40 percent of sales in the fourth quarter of 2011, compared to 46 percent of sales in the same period in 2010, the BHS report says.
Corcoran CEO Pam Liebman partly blamed the reduction in home sales on a lack of new development, noting that condo inventory fell 11 percent over the last year. The number of new listings added in the fourth quarter was 27 percent lower than the prior year and 16 percent lower than the prior quarter, according to the Corcoran report.
“In the new development sector, supply cannot keep pace with demand,” Liebman said in a statement accompanying the Corcoran report. “When properties enter the market they are highly anticipated and get absorbed rapidly, usually with price increases.”
Sales at new developments, which accounted for 15.7 percent of all transactions in the fourth quarter, dropped 27.8 percent over the prior year quarter, while median prices increased 14.6 percent, to $1.22 million, the Elliman report says.
For co-ops, sales volume dropped 16 percent over the prior year, to 996 from 1,186, while the median price slid 7.1 percent to $636,407, according to Elliman. BHS found the average co-op sales price dropped only 1 percent, to $1.15 million, with the average price for three-bedroom co-ops climbing a whopping 18 percent. Interestingly, Streeteasy.com found that more than half, or 55.6 percent, of closings during the quarter occurred among co-op resales.
For condos, sales volume dropped 8.5 percent, to 1,015 units from 1,109, but the median sales price rose 16.7 percent, to $1.6 million, according to Elliman. The median price for condos, according to Corcoran, increased 10 percent to $1.197 million—the highest since the fourth quarter of 2008, when the market plummeted.
The West Side was a particularly bright spot, partly as a result of high-priced closings at new condo towers such as the Aldyn and the Laureate. The median price for new developments on the West Side doubled to $2.87 million, the Corcoran report says.
Credited with bolstering the market in recent quarters, sales in the luxury segment—the priciest 10 percent of co-op and condo transactions— faltered somewhat in the most recent quarter. The number of sales dipped 12.6 percent to 201 and the median price declined 4.6 percent to $4.15 million.
Overall, the 2011 market was even, despite some headline-grabbing sales, Miller said. “It was a year of modest activity, stable pricing and we had these anomalies—trophy property sales,” he said. “I see that as a sidebar. It wasn’t what the market was about.”