The housing boom may, indeed, be over, but the residential sales market in Manhattan isn’t necessarily moving down.
Sales prices, instead, are almost at the level they were before the market dropped last fall.
Following the big 13 percent drop in the average apartment sales price between the second and third quarters of 2005, prices have risen a combined 12.9 percent, according to statistics from Prudential Douglas Elliman and appraisal firm Miller Samuel.
The average price during the second quarter of 2005, before the market first headed south, was $1,317,528. It then dropped to $1,149,813. But, then, at the end of the first quarter of this year, the price was back up to $1,300,928.
In the two quarters since the big drop, in fact, there has been a rise of 3.3 percent and 9.6 percent in each quarter, respectively. The 9.6 percent increase seen in the first quarter was largely a result of record Wall Street bonus money.
It remains to be seen if the rise in prices means the market is now due for a bigger fall, more horizontal growth, or movement upward. The sideways movement “is not necessarily a new thing, but the trick is how long will the sideways movement last,” said Miller Samuel CEO Jonathan Miller.
The horizontal movement has happened before. In 2003, the residential market moved sideways as prices remained flat in spite of the rising inventory, Miller said. He said if mortgage rates continue to rise as expected, demand will cool further. But as long as the rates rise gradually during a sound economy, the market isn’t due for a big decline.
“Economic conditions are pretty good,” Miller said, “so there don’t appear to be signs of a sharp correction.”
Prices are steady in part because sellers aren’t selling unless they get high prices like the ones seen during the boom times.
“Sellers aren’t going to sell unless they get their price but fewer buyers are willing to pay their price, so prices are holding but the number of transactions is falling,” Miller said.
If expectations of higher mortgage rates ring true, there will likely be a weakening in prices. In certain markets, prices will see no appreciation or a modest trend down, said Miller.