New Manhattan housing data provides window into bleak fourth quarter

By Candace Taylor | November 20, 2008 03:07PM

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.”