Luxury market takes a dive, lower-end stabilizes
July 02, 2009 09:20AM By Jovana Rizzo
Halstead's Diane Ramirez
The luxury home market continued to take a pounding in the second quarter of the year, while the low-end market showed signs of stabilizing, according to second-quarter Manhattan market reports released today by several real estate firms.
Halstead Property reported an 82 percent decline in closings over $10 million during the second quarter, compared to the same time last year.
Diane Ramirez, president of Halstead, said that potential buyers in the luxury market have been hesitant about purchasing homes and are waiting for the economy to improve.
"There's been a good deal of hesitancy on the purchasing of larger apartments, and I think that's partly due to the impact of this recession and of job losses," Ramirez said. "There are more concerns for higher-earning persons than in previous recessions."
According to the Corcoran Group's report, luxury resale co-ops fared better than condos, with median prices for co-ops falling 6 percent. Luxury resale condos saw a 22 percent decline in median price. In the luxury market, high-end new developments suffered the most with a 27 percent decline in median price.
However, the lower-end of the market, marked by studios and one-bedrooms, seems to be leveling out.
According to Prudential Douglas Elliman's report, which is prepared by appraisal firm Miller Samuel, all Manhattan studios and one-bedroom apartments saw less severe price cuts than larger units between April and June.
Median prices for studios fell 15.6 percent from the prior year in the same quarter, and one-bedroom median prices fell 16.6 percent. Meanwhile, on the pricier end, two-, three- and four-bedroom apartments all saw median price declines exceeding 20 percent. The median price for four-bedroom apartments fell a dramatic 46.7 percent from the previous year to $3.92 million from $7.35 million.
The lower-end "has been the marketplace that's been more actively selling," said Ramirez, adding that properties around the $1 million mark are seeing the most activity.
In the co-op market, according to the Elliman report, one-bedrooms and studios saw no decline in median price from the prior quarter, while the prices of larger units continued to fall. And in the condo market, the median price for a studio actually increased 2.8 percent from the prior quarter. The one-bedroom median fell by 4 percent, and the median for the units with two bedrooms or more fell by double-digit percentages.
For more market report coverage, click here.
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Comments
Anonymous
The "lower end" has not stabilized.
Comment #1 Posted By: Anonymous 07/02/09
Anonymous
This just in - expensive homes are selling because people can't qualify for the loans!!! Banks are actually looking at people's finances before they lend now, so you have to make money to buy expensive homes. There just aren't enough wealthy people who can qualify for $2M loans. Sure people may be willing to pay $2.5M for 2,000 sf but if the bank will only lend them $1M then they can't buy it. This is the new reality. And this is why home prices will fall and be more in line with a reasonable price to income ratio.
Comment #2 Posted By: Anonymous 07/02/09
Anonymous
Does that mean I can't pay 2.5M for a property plus earn the right to pay 3k per month in taxes and fees instead of renting for 5k per month (and decreasing). What about my god given right to make stupid decisions.
Comment #3 Posted By: Anonymous 07/02/09
Anonymous
Sales in Q2 '09 were 65% lower than sales in Q2 '07. Meaning they were of 50% year over year from an already lower number of closings in '08. Not good.
Comment #4 Posted By: Anonymous 07/02/09
Anonymous
Meet the new reality. After Cap and Trade and Healthcare reform, potential buyers will have even less money/credit. Then, when income and cap gains taxes skyrocket in 2011 to pay for all this gov't spending, a new reality of well-off will be defined. (Oh and did I mention cap and trade will require all homeowners to make their homes 'green' before they can sell them?) --welcome to a brave new world where wealth is now a 4 letter word.
Comment #5 Posted By: Anonymous 07/02/09
Anonymous
We still have a long way to go. At the high end you just don't have the buyer pool. Yes the better and more special high end units and homes will sell at some point but the rest will just sit. The most active part of the market will remain in the under $1mil sector and those prices are down 20-25% year over year. With rental prices soft it starts to make sense to rent over buy in all categories. Today's unemployment numbers increased and more unemployed have lost their benefits (off the roll). Now the question is how will the large real estate companies continue to handle decreasing revenue and cover their big overhead?
Comment #6 Posted By: Anonymous 07/02/09
Anonymous
Number 5 is right on.
Comment #7 Posted By: Anonymous 07/02/09
Anonymous
Sellers have zeerroooo!!!!
Comment #8 Posted By: Anonymous 07/02/09
Anonymous
diane is such a useless hack
Comment #9 Posted By: Anonymous 07/02/09
Anonymous
Dont you worry about a thing. The soul goes on no matter what the body will do.
Comment #10 Posted By: Anonymous 07/30/09