An active first quarter for residential sales kept a tight rein on the number of Manhattan apartments on the market as anticipation grows for the expected spring rush.
New condo units on the market have created some pockets of inventory, said brokers. But the market is generally tight, and there’s very little fat at the top, according to a number of brokers.
“There is a liquidity of money that is almost unprecedented, and it’s depleted inventory,” said Kirk Henckels, executive vice president and director of Stribling Private Brokerage. “When the spring market begins, there will have been no breathing spell for inventory to replenish.”
Low inventory levels at the top end of the market are a result of a buying frenzy fueled by bonus money that began in the final quarter of 2006 and hasn’t slowed yet.
The resale market segment is especially tight compared to the market for new development.
“There are pockets where there is no inventory and pockets where there is too much,” said Leonard Steinberg, a Prudential Douglas Elliman executive vice president who specializes in the Downtown luxury market. “Units on the resale market sell almost instantly,” Steinberg said. “There is too much inventory for new developments with approximately a two-year wait [for occupancy], but there are no options for resale properties today.”
According to Jonathan Miller, president of appraisal firm Miller Samuel, the number of apartments for sale in February was about the same as at the end of the 2006, but inventory has tightened since then.
There were 5,934 units on the market at the end of 2006 and 6,000 units in February, an increase of 1.1 percent. Last year, by contrast, inventory grew by 6.8 percent over the same time period.
The number has decreased since February, indicating the market may be bucking the normal seasonal trend of rising spring inventory.
“Overall inventory for March appears to be lower now than what it was at the end of February, below the levels seen at the end of 2006,” Miller said. “This suggests a fairly heavy level of new sales and a very active market with price appreciation.”
January sales figures, the most recent available at press time, showed the average apartment price was up 14.4 percent between January 2006 and January 2007.
According to Miller, the high end of the market may see price appreciation during the second quarter, even though the majority of luxury sales are seen in the earlier part of the year as a result of bonus payouts. Either way, it’s likely to drive up average prices in Manhattan.
“We have seen much of the extra supply of inventory at the high end get absorbed recently with the increase in sales activity,” Miller said. The high end of the market, while only a small percentage of total sales, sets the tone for the market, said Miller.
Miller said 30-year fixed mortgage rates dropping approximately a quarter of a point recently has built confidence among buyers, including those at the high end.
Another factor contributing to low inventory levels is sellers’ taking unsold properties off the market, further cutting the number of available units, said Miller.
Still, brokers are finding certain segments of the market selling quicker than others.
Uptown, specifically on the Upper East Side, buyers are finding limited choices for three-bedrooms, said Henckels.
“The prewar co-op market is as low as I’ve ever seen it,” Henckels said.
According to the Stribling Luxury Market Report, at the end of January approximately 50 co-op units priced over $5 million had signed contracts. For units priced over $20 million, the super high-end segment of the market, Henckels reported at least four sales during the first quarter.
“There is a lack of inventory for trophy properties,” Henckels said. “The demand is definitely there. It’s a question of supply.”
Brokerages say low inventory levels in all parts of the market are expected to rise in the spring season, however.
“More listings will come on and it will be enough to absorb all those bonuses people, who will stop spending by April or May,” Henckels said.
In the meantime, the market is inundated with purchases, said Miller. “If it’s a record first quarter, I wouldn’t be surprised.”