Luxury market takes a dive, lower-end stabilizes

By Jovana Rizzo | July 01, 2009 09:51PM

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.

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