Manhattan home sales off record 50 percent

Jul.July 01, 2009 09:23 PM

The second-quarter Manhattan market reports, released by city brokerages today, are a bizarre amalgam of unparalleled bad news — like significant price declines and record decreases in sales volume — and good news, such as more contracts and fewer price cuts.

Experts say the seemingly contradictory data reflects the springtime pickup in activity playing out against the backdrop of the continued real estate slump.

“Year-over-year, the numbers are very bad; I want to make that very clear,” said Bill Staniford, the CEO of PropertyShark, which partnered with the Corcoran Group to release a quarterly report. “But we are starting to see some silver linings.”

As expected, the impact of the fall’s Wall Street crisis and real estate slump continued to drag down the Manhattan market, with sales off a record 50 percent from the same quarter last year, quarterly reports released by Corcoran, Prudential Douglas Elliman, Halstead Property and Brown Harris Stevens found.

All of the reports indicate that the sales have declined by at least half from the second quarter of 2008. Elliman’s report recorded 1,532 Manhattan sales in the second quarter of 2009, down 50.3 percent from 3,081 in the same period of last year. Appraiser Jonathan Miller, CEO of Miller Samuel, who prepared the report for Elliman, said that is the largest year-over-year decline in sales volume he has seen since he started tracking data in 1989. The second-highest was last quarter’s decline of 47.6 percent from the prior-year-quarter.

As expected, sale prices also took a beating. For the first time in years, both the average and median sales price of a Manhattan apartment showed significant declines. The average sales price of a Manhattan apartment is now $1.31 million, down a once-unthinkable 21 percent from the same quarter of 2008, according to Elliman’s market report, while the median sales price fell 18.5 percent to $835,700, from $1,025,000 in the prior-year quarter.

“To have them both down by that much is something because you haven’t seen that in recent memory,” said Gregory Heym, chief economist at Brown Harris Stevens, whose report found that average and median sale prices had declined 15 and 19 percent, respectively. However, he pointed out that 2008 was a record year, thanks in part to sales at uber-expensive 15 Central Park West and The Plaza.

One reason price declines appeared more severe this quarter is because closings at those developments have now finished, analysts said.

“You’re going to see much less skew associated with the overall Manhattan market,” Miller said.

Still, the most accurate snapshot of the current market comes from resales, he said, since new development sales often close long after contracts are signed. According to Elliman’s report, the median resale price was $725,000 in the second quarter, down 25.6 percent from $975,000 in the prior year quarter.

Still, Miller noted what many brokers have been reporting — a sharp uptick in sales activity, starting in mid-May, despite the dreary figures.

“A lot of the brokerage community could feel the uptick in activity this spring,” he said.

That was particularly clear in a quarterly report released by the listings Web site An eye-popping 82.4 percent more listings went into contract this quarter than last quarter, rising to 2,477 from 1,358, the report found. Data from the prior year quarter was not available. also found fewer price cuts and a reduction in inventory to 11,175 listings from 11,717 in mid-May, according to Sofia Kim, vice president of research at the company and the author of the report

Dramatic as the figures may be, they don’t necessarily represent a return to business as usual, she said, noting that one reason for such a high percentage increase in contract signings is in part due to a very small number of contracts signed.

“We don’t know how much of it is a true rebound versus a seasonal thing,” she said. “I think there are so many people who are looking for any glimmer of hope, but you have to make clear that it’s typical to see increased activity in the second quarter.”

The uptick felt particularly drastic because of the massive slowdown in transactions wrought by the Wall Street crisis, Miller said.

“It felt more exaggerated because there was such a dearth of activity before it that we played catch-up in a short period of time,” he said.

He remains steadfast in his assertion that this uptick is merely spring fever, and not a signal that the downturn is over.

“The increase in activity is due to seasonality and at this point is not evidence of a turnaround,” he said. “I don’t think that we can conclude that this is over or that we might not have more downside in the future.”

For more market report coverage, click here.

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