New Manhattan housing data provides window into bleak fourth quarter
November 20, 2008 02:59PM By Candace Taylor
The real estate industry is waiting with baited breath for the next round of quarterly market reports, when Manhattan will see the real effects of the mortgage crisis on home sales. But a new analysis by real estate appraiser Mitchell, Maxwell & Jackson offers a glimpse at the bleak picture that the reports will likely show.
Manhattan data compiled by the appraisal firm and released yesterday showed that the volume of signed contracts in September and October plummeted roughly 75 percent from the same period last year.
"It's pretty unbelievable," said Jeffrey Jackson, a principal at the firm.
He estimated that roughly 50 to 70 transactions are being signed per week in Manhattan, far fewer than in previous years.
The number of recorded sales in Manhattan in 2007, for example, was a record 13,430, according to city data, yielding an average of 258 sales per week.
Jackson's data was culled from contracts signed between September 1 and mid-November for homes his company appraised. That number, Jackson said, makes up one-third to one-quarter of all sales in Manhattan. While the sample size isn't as large as the sales covered in market reports produced by the Corcoran Group and Prudential Douglas Elliman, it gives a more current picture of conditions than do the quarterly reports, which track closings in the previous quarter, reflecting deals negotiated months earlier.
Jackson estimated that apartments are now selling for roughly 10 to 15 percent less than they were in early 2008, when the credit crisis began to take hold in the city. The data also showed that homes are now being sold at levels approximately equal to what they were worth in the first half of 2006, he said.
"All the turmoil in the financial markets is the major factor," Jackson said. "The reason people aren't signing contracts is because they believe [the home] will be worth less tomorrow. There is no compelling reason for a buyer to step up and purchase today."
He added that a cause for concern is the drop in demand for housing in New York City.
"There's been an enormous shift in overall demand," he said. "The absorption rate is atrocious."
However, he said, the speed of the slide means the city's real estate market may crater sooner than expected.
"The good news is that it's happening very steeply right now," he said. "With the shrinking of the time period, maybe we'll get over it sooner."
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Comments
Anonymous
hold on to your seats!!!...2009 is right around the corner and it's not going to be pretty.
Comment #1 Posted By: Anonymous 11/20/08
Anonymous
The real estate industry is waiting with fish-smelling breath?
Comment #2 Posted By: Anonymous 11/21/08
Anonymous
Finally someone not afraid to speak the truth
Comment #3 Posted By: Anonymous 11/21/08
puhleease
"The reason people aren't signing contracts is because they believe [the home] will be worth less tomorrow.There is no compelling reason for a buyer to step up and purchase today" One of the dumbest things I've ever heard. If you plan on owning your apartment for 5 years or more years-you are smart to buy now. Manhattan real estate is the best investment you can make.I laugh when people say they want to wait to buy as well. Inventory is going to be a lot low next year! people who need to sell right now for financial reasons or are selling b/c they really believe the market won't rebound are desperate to unload right now-and those who don't think it'll rebound are a sad bunch of sheep! I've seen the worst decades ago. I bought then when everyone was "advising" me not to. Telling me to wait for the "real drop" to happen. Now I own an impressive portfolio. Granted things will get worse before they get better, but believe me to not start buying now is the worst mistake you can make. That's if, of course, you can afford to do so.
Comment #4 Posted By: puhleease 11/21/08
Anonymous
being in the real estate business and in one of the above firms you mentioned..i've never even heard of maxwell jackson. you should really do more thorough reporting than base an entire article on one firm's "appraisals". your 6th article states my point perfectly, but the last sentence makes no sense and is quite laughable.
Comment #5 Posted By: Anonymous 11/21/08
Jason
puhleease may think it is wise for an investor to buy just after real estate prices start to fall. History tells otherwise. I'd buy just after prices start to rise.
Comment #6 Posted By: Jason 11/21/08
Anonymous
I head Harlem is doing very well. Prices went up recntly 10% from 30 yrs ago.
Comment #7 Posted By: Anonymous 11/21/08
Anonymous
1+1=2 historically, in the present and in the future. The late eighties and early nineties recession trimmed 40% off of Manhattan real estate values, 60% when adjusted for inflation. The rate of price depreciation over the next several years in NYC, and in Manhattan specifically, will be precipitous, very precipitous.
Comment #8 Posted By: Anonymous 11/22/08
Anonymous
Puh-leeeze.... ha ha The financial meltdown will take out thousands of the highest paying jobs that supported the incredible price rise in the city. The downturn in Manhattan has just begun ... give it another couple of years and we could have a nice discussion about the health of the city's real estate market. If the same guys who got the economy in this mess by "over-leveraging", now invent an instrument to short the real estate market in Manhattan - I'd put everything I own into this type of instrument.
Comment #9 Posted By: Anonymous 11/23/08
Anonymous
puhleease... it's not because you currently don't have any clients in your Real Estate Agency that you must spend all your time on the web...try to take advantage of that extra-spare time to do something more productive: accounting, vacuum-cleaning, whatever...anyway, you need to find new passions quickly as the market will keep dropping for the next 4-5 years and you won't spend much time selling houses
Comment #10 Posted By: Anonymous 11/25/08
enzo
puhleeasee..... it's called denial. you have it.
Comment #11 Posted By: enzo 11/27/08
Anonymous
puhleease, comparing this to the 80's is absolutely ignorant. This financial meltdown trumps that of the 80's many times over. Leverage is being removed from the financial system, which means lower asset prices. It also means lower compensation for finance professionals (because less leverage implies lower ROE for banks) probably one of biggest drivers of real estate prices in Manhattan. I hope your "portfolio" was financed with cash, otherwise you'll be the proud owner of many upside down mortgages.
Comment #12 Posted By: Anonymous 12/02/08
Anonymous
The problem is that EVERY developer of residential property in Manhattan offers discounts to F & F who's intention is to flip the property once sales are at 100%. The prospect of not being able to flip new inventory is creating a downward spiral in the market. I'm thinking a lot of Developers who put their models together based on 2007 numbers are going to be hurt very, very badly. Agreed. Buy now if your intention is to live in an apt for 5+ years.
Comment #13 Posted By: Anonymous 12/04/08
Anonymous
Yes, WAIT IT OUT - Finally people will get what they want and need in real estate in Manhattan and NYC in general. Gone GONE GONE are the days of OVERPRICING - This is what we've all been waiting for - Let the Slide Begin. Let's watch the prices drop faster than the ball in times square. I appreciate this person speaking honestly for once. We all know it's just the beginning. Wait and then BUY later. Let reality sink in.
Comment #14 Posted By: Anonymous 12/08/08
Anonymous
PS: I've already seen a TON of properties sit on the market for a very long time with a price drop and still not sell right away. Don't listen to Corocoran and the others who say the market here won't be affected - the truth is IT ALREADY HAS. All you have to do is look on craigslist and you'll see "Owner financing", "owner pays down payment", "Must Sell", "Price Drop", "Bank Owned" - what does that tell us? Don't listen to anyone in Real Estate except this guy in this article who is the only honest one I've read in the paper. I'm not sure how dumb the other ones think we are - all you have to do is look and see that prices are falling drastically.
Comment #15 Posted By: Anonymous 12/08/08