The Real Deal New York

Seasonal uptick for apartment market?


March 31, 2008
By Lauren Elkies

Spring is in the air, bringing hope to Manhattan real estate brokers that the traditionally busy season will give a boost to a slow real estate market.

But a seasonal uptick may not be enough to spark a revival of a market dampened by the aftermath of the credit crisis.

“Historically, [April] begins the real ‘spring’ market after everyone has received their bonuses from the year before, taken stock of their tax returns and the weather turns better,” said John Wollberg, executive vice president of Atco Residential Group. “This year, I would predict more of the same level as we saw in March.”

In anticipation of the traditionally busiest season of the year, sellers have started putting their homes on the market, bumping up inventory.

“The upward trend in inventory we are observing at this time of year appears to be seasonal. The amount of the increase since the first of the year is within the range of increases seen in the past seven years since we began tracking this data,” said appraiser Jonathan Miller, president and CEO of Miller Samuel.

The number of Manhattan homes on the market increased in February from January, the most recent two-month comparison available at press time. There were 6,225 listings in February versus 5,926 homes the month before, a 5 percent increase, data from Miller indicates. Year-over-year, however, inventory dropped 1.1 percent from February 2007′s 6,292 listings.

The data does not appear remarkable.

“Inventory tends to rise from January to April as listings enter the market before the spring selling season,” Miller said. “Once sales levels increase in the spring, inventory levels off and then declines over the summer.”

At the same time, prices are going up, but not at a dramatic rate.

“We are experiencing increasing signs of a market in transition — pockets of swift sales, but otherwise longer marketing periods for apartments than has been the case in the recent past,” said Alan Nickman, an executive vice president at Bellmarc Realty.

Fallout from the credit crisis still lingers and, if the national market is any indication, won’t likely go away anytime soon.

“There is a chance there may be a slower sales volume due to the credit crunch and the percentage of uncertain approved mortgages, which reflects on the market negatively, but overall, the market will remain consistent,” said Dawn Tsien, president of the new developments division at Coldwell Banker Hunt Kennedy.

The median sales price ticked up 1.2 percent to $860,000 from $850,000 between January and February, according to data from Terra Holdings, parent company of Brown Harris Stevens and Halstead Property. Out of the East and West sides, Downtown and Northern Manhattan, the West Side saw the greatest jump in median sales price, to $1.3 million in February from $995,000 in January, a 26 percent change.

“This is due primarily to a bunch of closings at 15 Central Park West, and some other new developments including the Avery and 200 West End Avenue,” said Gregory Heym, executive vice president and chief economist for Terra Holdings.

The greatest drop was in Northern Manhattan, where the median fell 12.9 percent to $418,000 from $480,000 in January, Heym’s data shows. He attributes this to “fewer high-end new development closings. Developments have been inflating the overall median in [that] market for a while now.”

The data has been influenced by a spurt of residential sales in the luxurious 15 Central Park West as well as the Plaza Hotel.

“The interesting thing will be, when 15 CPW and the Plaza are done with all their closings, to see what happens to the numbers,” Heym said.

Manhattan’s rental market continues to show weakness. The average rent in Manhattan dropped in February to $3,180 a month for studios through three-bedrooms, from $3,221 in January, a 1.3 percent change, according to data from Citi Habitats.

“The rental market is showing signs of price decreases in cases where a landlord has multiple units available,” said Colleen Dwinell, sales agent at DJK Residential. “Landlords in certain instances are reacting to the fear of extra inventory and the unknown. It has been a landlord market, but there are signs that this is changing.”

What the pros had to say

Real estate brokers are crossing their fingers that business will be good this month. To get a sense of what is going on in the market, The Real Deal sent out a survey last month to industry pros. Following is a sampling of what the experts had to say.

Elizabeth Stribling, president, Stribling & Associates

We are seeing [price weakening] with sellers who originally overpriced their property in an overreach and also with sellers who are asking [for] dollars based on their personal needs rather than on market reality.

John Wollberg, executive vice president, Atco Residential Group

One positive trend is that ‘all cash’ purchasers have an opportunity to stand out in the pool of buyers and have a better opportunity to negotiate a more favorable purchase price.

Colleen Dwinell, sales agent, DJK Residential

At the moment, the sales market is not increasing or decreasing. People are waiting to see what will happen.

Alan Nickman, executive vice president, Bellmarc Realty

Previously, asking prices were just going up incredibly compared to previous sales, so instead of seeing rapidly increased prices against the last sale, we are now seeing modest increases against those numbers.

Samuel Thomas (Toma) Milbank, vice president and director, Brown Harris Stevens

I am finding that most sellers are pricing their apartments more reasonably. This has had a great impression on many of my buyers. [Yet] new developments are only going on for more and more money. There appears to be no adjustment with pricing from the
developers, and it appears to not have affected them.

Shaun Osher, founder and CEO, CORE Group Marketing

People are reducing their prices to something more reasonable. Some cuts are as little as 2 percent and as much as 20 percent, depending on how overpriced they are.

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