The Real Deal New York

Homebuyers melt away

Are buyers stuck in a heat-induced stupor or lacking confidence in the economic recovery?

August 01, 2010
By Candace Taylor

With July on track to be the hottest month in New York City history, real estate agents report that the sticky, 100-degree heat has kept potential buyers at home.

“Some people are staying indoors because they can’t deal with the heat,” said Olga Alexakos, an agent at the brokerage Core.

While summer is usually slow, this year it’s “quieted a bit more than usual on the weekends,” said Sara Rotter, a managing director at Citi Habitats.

Underlying this heat-induced stupor are very real fears about the sustainability of the market recovery.

Second-quarter market reports released by the city’s major firms brought positive news. Indeed, according to Prudential Douglas Elliman, the number of sales in the second quarter surged 79.9 percent from the same period of 2009, while the median sales price was $899,000, up 7.6 percent from $835,700 in the prior-year quarter.

Rentals showed a similar spike in activity, though rents remained roughly flat from last year. Elliman found that the average price for a Manhattan rental apartment in the second quarter was $3,710, down 3.3 percent from $3,839 in the same quarter of 2009.

But Jonathan Miller, CEO of appraisal firm Miller Samuel and the author of Elliman’s reports, has warned for months that the sales surge in early 2010 was due in part to pent-up demand from the post-Lehman deep-freeze. He’s predicted that weakness will return later in the year.

“The spring market is the Super Bowl of the housing market every year,” Miller told The Real Deal, adding that “it’s the second half of 2010 that’s more of a worry, because of the release of pent-up demand.”

How the market fares this fall “all depends on jobs,” he said.

Buyers and sellers seem all too aware of that fact.

“Prices have certainly rebounded and there are a lot more customers in the market, but everyone seems a bit on edge, wondering if it will hold,” said Eyal Amir, a salesperson at Downtown brokerage Miron Properties.

Some buyers “feel the economy has really turned around, and feel optimistic about the housing markets,” said Edward Longley of City Connections Realty. However, “others are cautious and see the volatility in the stock market, the instability in the Middle East and the fact that the U.S. economy is still shaky as reasons to hold off on buying or selling.”

Many sellers, optimistic that the recovery will continue, have taken their homes off the market until Labor Day. Those who are more pessimistic have decided to rent their homes for a year or two while waiting for prices to rise, agents said.

Buyers, meanwhile, “are still on the fence, and you can feel a lack of confidence in the economic environment,” said Adriano Hultmann, a senior vice president at Elliman, who added that most of the offers he’s seen recently are low-balls.

“I believe that it will eventually settle into a more stable mood; however, it will take some time,” he said.

Agents named buyer’s jitters as a major factor in hurting business (see related story on “Deal Killers”).

Whatever the reason, Rotter said she’s already noticed a slight drop in activity.

“We have seen a little bit of a slowdown compared to the end of the second quarter, when there was a huge surge in the market,” she said.

The sale late last month of the Duke Semans Mansion at 1009 Fifth Avenue (a coup for Brown Harris Stevens brokers Paula Del Nunzio and Shirley Mueller) is indicative of the contradictory forces at work in the market. In city documents, the sale appeared to have closed for $44 million, reportedly to Mexican billionaire Carlos Slim. The deal provides evidence of the rumored re-emergence of the high-end market, and apparently resulted in a profit for owner Tamir Sapir, who purchased the Beaux-Arts landmark in 2006 for $40 million. Yet the mansion was sold at a deep discount from the $50 million asking price. And whether it will prompt similar sales is still a lingering question mark.

All this uncertainty has left the market in a kind of holding pattern, and industry insiders are looking to the fall for clarity.

“A lot of current and potential sellers are watching to see what will happen after Labor Day,” Alexakos said.

MENU