Manhattan home sales up, prices flat

By Candace Taylor | July 01, 2010 12:01AM

Low interest rates, good deals and first-time homebuyers — some
spurred by federal tax credits — helped cause a spike in real estate
sales and stabilize prices in the second quarter of 2010, according to Manhattan market reports released today by the city’s major residential firms.

The
number of home sales surged in the second quarter, according to reports
from Prudential Douglas Elliman, the Corcoran Group, and sister
companies Brown Harris Stevens and Halstead Property, who use the same
data set for their reports. The reports estimate that sales jumped
somewhere between 47 and 81 percent from the slow real estate market of
last year, and increased around 16 percent from the first quarter of
this year.

Prices, while lower than during the boom years, have
stabilized, and in some cases appear to have increased slightly, the
reports indicate.

Elliman, the city’s largest firm, put the
average sale price for a Manhattan apartment at $1.43 million, a 9.1
percent increase from the prior-year quarter. The median sales price,
Elliman found, was $899,000, up 7.6 percent from $835,700
year-over-year. The average price per square foot was $1,051, down
slightly from $1,056 in second-quarter 2009.

BHS and Halstead
found that the average sales prices climbed 9 percent to $1.38 million
from the prior-year quarter, and the median price rose 6 percent to
$842,779.

Data from the Corcoran Group, however, showed that
prices remained virtually flat. Corcoran estimated that the average
sales price was $1.34 million, dipping slightly from $1.35 million in
the prior-year quarter, and that the median sale price was $810,000, on
par with the same period in 2009.

Real estate search engine
Streeteasy.com also released a market report, which estimated that the
average price of a Manhattan apartment increased 4.1 percent to $1.39
million in the second quarter, and the overall median price rose 2.6
percent to $800,000.

Appraiser Jonathan Miller, CEO of Miller
Samuel, which prepared Elliman’s reports, emphasized that prices
haven’t changed much over the past few quarters. Increases in the
average and median are really a result of more movement in the higher
end of the market, which was largely dormant after the Lehman Brothers
collapse, even after sales of less expensive units had started to pick
up.

“Prices are stable,” Miller said. “They are not rising, even
though the average and median are rising.” Rather, the increases
appeared because “the higher end of the market began to wake up in the
early part of the year,” he said.

The average size of an
apartment that closed in the second quarter was nearly 10 percent
larger than a year ago, according to Elliman’s data. Miller also noted
that 18 percent of the units that closed in the second quarter were
three-bedrooms, up from 12 percent in the prior-year quarter.
Meanwhile, 12 percent of units that closed in the second quarter were
studios, down from 17 percent a year ago.

BHS President Hall
Willkie said at his company, around 60 percent of all sales were under
$2 million in the second quarter. In January of this year, that figure
was 80 percent.

Still, Miller said, the market report unmistakably shows positive signs in comparison to the doldrums of 2009.

“Things are far better than they were,” he said. “It’s hard to imagine having this conversation a year ago.”

Thanks
to the Lehman Brothers collapse and ensuing economic downturn, prices
are lower than they were at the peak of the market. In the spring of
2008, for example, the median sales price of a Manhattan apartment was
$1.025 million, compared to $899,000 this quarter, according to
Elliman’s data.

“We’re off the peak, but [prices] are not falling right now,” Miller said.

That,
along with low interest rates, is luring buyers into the market now
that the worst of the economic crisis seems to be over.

“Mortgage
money is cheap and values are down,” Willkie said. As a result, renters
who in the past “couldn’t afford to buy what they needed” are coming
into the market, he said.

The $8,000 tax credit, which applied to contracts signed by April 30, helped motivate these buyers, he said.

While
that may not seem like a lot in the expensive world of Manhattan real
estate, it had a psychological effect, he said, especially since in
many cases it “more than covered closing costs.”

Jane Greenberg,
a vice president at Halstead, said she has had eight deals close or go
into contract since April. That’s roughly double the number she did
during the same period last year.

In five of those deals, the buyers were first-time homeowners — the most she’s ever seen in a single quarter.

“In
every single case,” she said, “they were people renting who knew they
wanted to buy and had been thinking about it for a long time. They were
waiting for the right time.”

Many of these buyers worried that
prices would soon start to increase, she said. One of her buyers closed
a month ago on a one-bedroom apartment on the Upper West Side for
$550,000. A few days ago, he emailed her excitedly when a unit similar
to his in the building came on the market for $625,000.

“He said, ‘I’ve already made more money and I’m so happy,'” Greenberg said.

There’s no telling what the unit will sell for — it may be overpriced — but the aggressive pricing is good news, she said.

“This is certainly an indication that we’re seeing an upward trend,” she said.