Manhattan’s residential market remained relatively stable, as housing prices and inventory numbers barely moved over the last several weeks, say market watchers.
“We saw that for the month of October, prices seemed to be fairly flat — unchanged from previous months,” said appraiser Jonathan Miller of Miller Samuel in late November. “Inventory levels over the past five months have also remained fairly flat, only going up or down 100 listings per month.”
Miller said this flatness is a new aspect to a market that experienced considerable volatility over the first half of the year and through 2005. Despite slowing sales, prices rose in the first half of this year, coming off a weak second half of 2005. They slipped in the third quarter, bringing the average price of a Manhattan apartment to $1,050 a square foot.
Prices more realistic
The market tightening between the second and third quarters has made sellers more cautious when they price their properties and put them on the market for the first time, Miller said. When homes were still appreciating in value at a healthy clip, many not-so-serious sellers would “go fishing,” placing their properties on the market at inflated prices on the chance that a buyer might bite. That no longer works very well.
“Now, there is a certain precision required for pricing due to the increased competition,” Miller said. “There are no more casual sellers and the property must be priced properly or else it won’t move.”
All in all, it’s part of a long, slow slide toward a buyer’s market.
“We’re sort of in this neutral mode, maybe the market is tilted a bit to the buyer’s side,” said Miller. “But it’s not an overwhelming advantage. I guess I’d characterize it as a buyer’s market in the weakest sense.”
Wall Street fuels luxury-market surges
The high end of the market remains competitive, though. The most expensive properties in Manhattan still sell. Miller Samuel data indicated prices for these elite properties — the top 10 percent of the priciest available listings — rose 18 percent in the third quarter. The average property in the top market bracket sells for $4.5 million.
Thank Wall Street for the price hikes. The Wall Street Journal reported last month that investment bankers and traders can expect to see their bonuses rise 10 to 20 percent this year, which should prompt another wave of top-tier property purchases.
“Wall Street bonuses are supposed to be higher, so the luxury market should be strong in the first two quarters of 2007,” said Miller. “Wall Street workers account for just 5 percent of employees in the city and they take home 20 percent of the wages. They have a significant leveraging effect on consumption.”
Glenn Norrgard, a broker for the high-end firm Sotheby’s International Realty, agrees. His most expensive listing this fall, an $8 million pad at Skylofts at 145 Hudson Street in Tribeca, is among his most-viewed properties, and most prospective buyers are Wall Street heavy hitters.
“It’s the middle level of the market that has been flat. The [high-end] market is still being shown and people are still buying at that level,” Norrgard said. “All indications are that the Wall Street bonus numbers will be higher, so people are looking around now.”
Norrgard said brokers expect a lot of money to be spent in Manhattan this year. He said much of last year’s bonus money was used to buy homes in the Hamptons. While the bonus numbers bode well for brokers at the top end, Wall Street alone won’t prop up the entire New York City residential market.
“Having big money transactions around does not mean there’s a booming real estate market,” Miller said. “But it does set a psychological tone that’s positive.”
“God bless these bonuses,” added Kirk Henckels, director of Stribling Private Brokerage, which handles high-end properties. “[The bonuses] will keep the market going through spring just as they did last year.”