From the February issue: Slowly, Manhattan’s residential real estate market is coming back to
life. When the city’s major brokerages released their fourth-quarter
market reports last month, they revealed a clear jump in activity. The
number of sales in the fourth quarter grew 8 percent from the same
period in 2008 and almost 11 percent from the previous quarter,
according to Prudential Douglas Elliman’s report.
But thanks to the lingering grip of the credit crunch, the vast
majority of those sales were resales in established buildings, not new
developments.
Only 19 percent of closed sales in the fourth quarter were in new
condos, according to Elliman, down from 38 percent in the fourth
quarter of 2008. By contrast, some 58 percent of closed sales in 2006
were in new developments. Meanwhile, Elliman estimated that the “shadow
inventory,” or not-yet-released new development units, may total more
than 6,000.  [more]

Adrienne Albert, CEO of Marketing Directors

The residential market in the New York City metro area has bottomed out, according to Adrienne Albert, CEO of new development marketing firm Marketing Directors, but concessions still abound, for both buyers and renters, she said. Even so, Albert said that the incentives have begun to dwindle as the market stabilizes. “We don’t see this huge dumping of product into the rental market, so that’s why inventories keep coming down and the concessions get tighter,” Albert said. “In the condominium market, there was a time when everybody was terrified; sales came to a halt. You could get 20 percent, sometimes as much as 25 percent, off the list price.” Today, developers are “cautiously optimistic” about the future, Albert said, with a huge uptick in interest from foreign buyers helping to even out the industry.

With the Federal Housing Administration struggling to meet its reserve fund regulations, city developers were holding their breath, hoping that the organization, which allows apartment buyers to put as little as 3.5 percent down, would continue to back loans. The organization’s troubles have shed new light on the importance of FHA, which some city developers say has become integral to the financial security of the condo business. “If you asked me about FHA a few years ago, I would have looked at you funny,” David Kramer, principal of the Hudson Companies, the developer of FHA-approved condominium Third + Bond in Carroll Gardens, said. “Now we have gotten involved in making sure that as many financing options as possible are available for buyers, and that is where FHA comes into play.” In the wake of the FHA’s financial woes, regulators have chosen to actually loosen standards, Crain’s reported, with condos needing just 30 percent of units pre-sold, as opposed to 50 percent, to qualify for FHA as of Dec. 7.

Any New Yorker not living under a heavy rock in Central Park knows the condo and townhouse market is in rough shape. But for Harlem, the situation is a particularly severe brand of awful this year. “Condos are in deep doo-doo,” Willie Suggs, an independent broker and more than 20-year veteran of Harlem real estate, said. The first two quarters of 2009 saw just 83 apartment sales in east and west Harlem combined, a grim number when held in comparison to 2008, which saw 229 deals in the last two quarters, according to appraisal firm Miller Samuel. Prices are faring no better; in 2008′s second quarter, the average price per square foot for a one-bedroom apartment in Harlem was $900. In the second quarter of 2009, that figure was down at $572.

This round of quarterly market reports has finally begun to reflect the
beating new developments took at the hands of the financial crisis
this fall. September’s Lehman Brothers crash is now several quarters behind us,
long enough for contract signings from that time to begin to close (or
not close, as the case may be.) Meanwhile, closings at 15 Central Park
West and the Plaza are now mostly completed, allowing the reports for
the first time to begin to show trends in pricing, not skewed by
closings of spectacularly priced homes in those buildings. [more]