The Manhattan residential market remained relatively stable, if lackluster, in the second quarter of 2011, according to newly released market reports.
“We’re bumping along the bottom,” said Jonathan Miller, president of Miller Samuel Real Estate Appraisers and the preparer of quarterly market reports for Prudential Douglas Elliman, the city’s largest brokerage firm.
Manhattan’s median sales price in the second quarter was $850,000, 17 percent below the market peak of $1.025 million in 2008, according to the Elliman report. That’s an improvement from the depths of the downturn, when Manhattan prices were down 25 to 30 percent from the high. “We’ve recaptured some of that,” Miller said.
But prices have fallen from last year due to the impact of the first-time homebuyer’s tax credit, which prompted “a wild spike” in home sales nationwide that halted after the program expired in April 2010, said Miller, who also does market reports in Las Vegas and Washington, D.C.
The Manhattan median sale price dropped 5.5 percent in the second quarter from $899,000 in the same period last year. By contrast, the median was 8.7 percent higher than the previous quarter — a result of the normal increase from slow winter sales in the first quarter to the busy spring market, Miller said.
Sales volume showed a similar pattern. Elliman’s report found 2,650 closed sales in the second quarter, down slightly from 2,756 in the same period last year but up 10.7 percent from the previous quarter.
The market’s schizophrenia continues to befuddle brokers, sellers and buyers.
“I can only surmise that the recovery we’re seeing is occurring in fits and starts,” said Sandy Edry, a senior vice president at Citi Habitats.
For example, he said, “We’ll see large turnouts at open houses and three or four offers/contracts in one two-week period. And then it stops. Then you can have a lull of several weeks and just as you start getting worried that we’ve entered a slump, you see a significant spike in activity again. This has happened several times in the last few months.”
One positive sign is that 10.5 percent of transactions in the second quarter sold at prices above their last listing price, Miller said. That’s the highest percentage since the third quarter of 2008, just before the Lehman Brothers collapse.
That could indicate that Manhattan brokers have simply gotten better at pricing properties since the worst of the recession, when homes traded so rarely that market values were largely shrouded in mystery. Now, brokers generally have enough comps to accurately price properties.
“Because of transparency in prices, the proof of what [a] place is worth is easier to show [sellers],” said Bill Kowalczuk, a senior vice president and associate broker at Town Residential.
Of course, convincing homeowners to price appropriately is still difficult, and some sellers are getting overly ambitious when it comes to price (see “Sellers getting greedy”). In part because of this, many properties currently on the market are overpriced, Miller said. “There are people who are testing the waters who may have bought at peak and are trying to break even,” he said.
These unrealistic sellers heighten buyers’ already strong belief that there are few suitable properties for sale. “It feels like there’s less inventory than there is,” Miller said.
There were 8,070 properties for sale in the second quarter of 2011, down 1.1 percent from 8,157 in the same period last year, according to the Elliman report.
“Last summer, I remember inventory being on the market that still needed to be absorbed,” said Holly Sose, a senior agent at City Connections Realty. “Now, my buyers are ready to move and there is not enough attractive supply.”
That’s particularly true in some pockets of the market. For example, family-size apartments are in great demand, said Louise Phillips Forbes, an executive vice president of Halstead Property.
“In every [area] of the city, there is a lack of inventory in three to five-bedroom apartments that has revealed a tremendous pent-up desire,” Forbes said, adding that this demand has prompted buyers to jump at the listings that do come on the market. “People buying at this level have a certain amount of security, and so they’re not afraid to bid above the asking prices.”
Juliette Janssens, a senior vice president and associate broker at Sotheby’s International Realty who is listing a 975 Park Avenue penthouse for $25 million, noted a similar phenomenon.
“We’ve noticed a lot of buyers ready to pay all cash for big-ticket apartments,” Janssens said.
Meanwhile, the “double-dip” fears plaguing the rest of the country still seem far away to New Yorkers, though some expressed concerns about potential Wall Street layoffs.
“Second quarter was positive for us, and we saw a lot of activity,” said Doug Perlson, the co-founder and CEO of RealDirect, a New York City-based brokerage and real estate technology company. “I’m more concerned with the third quarter, especially if the financial sector, which bounced back quite strong, takes another hit.”
If that does happen, most industry professionals expect the impact to be milder than the first downturn.
“I am not worried about double-dip decline,” said Karen Berman, a vice president at Argo Residential. “I do expect prices to decline, but [less than] 10 percent.”