The Real Deal New York

Housing exits summer strong

November 27, 2007
By Tom Acitelli

The average Manhattan apartment price stayed well above $1 million in August, slightly down from the preceding two months, but still far above the same time last year, according to brokerage reports.

The average price was more than $1.14 million, according to a report by Halstead Property, up 14 percent compared to a year ago. The median price a more reliable indicator for the market’s strength or weakness also increased over the last year by double digits, to $725,000.

Prices did decrease from June to August, according to the Halstead report, setting off fresh speculation that the housing boom may be over or at least on its way to over. The average apartment price was down 14 percent from June, when it was $1.332 million

But such seasonal fluctuations don’t spell an epitaph for the housing boom, brokers and appraisers say.

“Traditionally and this was the case a year ago prices peaked pretty much after the spring buying season,” said Greg Heym, chief economist at Halstead. “Most of those sales close around May or June. To have prices take a dip in July or August, I don’t think is really news to anybody. It’s typically the case.”

Some real estate professionals pointed out that the Halstead report might be less accurate for a big-picture view of the market because it uses monthly numbers, and, therefore, a smaller set of data than reports covering longer periods of time.

An earlier mid-year analysis by the Corcoran Group put the median Manhattan co-op price at $625,000 and the median condo price at $995,000. The average prices for both types of apartments were well above $1 million at mid-year, according to Corcoran.

One notably strong segment of the market in August was lofts, which set a new record that month as the median price per square foot reached $966, according to Halstead.

That’s a 25 percent increase over August of 2004, and is consistent with the August trend of Manhattan apartment prices rising from last summer to this summer.

If prices decrease as the calendar year ends, they will not drop precipitously. Rather, brokers say, they’ll land softly.

Interest rates remain low and demand high, particularly for luxury properties, but signs of a soft landing are out there for those who want to notice: Interest rates are creeping up from their historic lows and the dollar is gaining strength against the euro. (One euro is worth about $1.20 now, down from about $1.30 last summer.)

“As the dollar gets stronger,” said Mark David Fromm, president of brokerage Mark David & Company, “we’re probably going to lose a lot of the non-U.S. customer base. The fact that interest rates are rising is going to cause a leveling off. Much of the [current] activity, I think, is people are basically taking advantage of the low-rate environment.”

That environment, brokers say, has fostered an optimism that, more than any single economic factor, is buoying the market as it eases from the summer into the fall. After all, according to the Halstead report, people are still perfectly willing to buy a loft costing $966 a square foot.

“It’s all mental,” said Lisa Maysonet, a top-producing broker at Prudential Douglas Elliman. “I think buyers still have the incentive to buy.”

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