Properties priced above $2 million may start moving more slowly, as high-end listings linger on the market, increasing inventory but not yet depressing prices, brokers say.
April is traditionally the peak month for new listings hitting the market to capitalize on strong seasonal sales. Listings increased 4 percent from March, climbing to 4,500 from 4,327, said Jonathan Miller, president and chief executive officer of Miller Samuel Inc.
But a slower market doesn’t mean potential buyers are running for the hills. Inventory is tighter than a year ago, with the overall number of listings 12.8 percent less than this time last year. There were 5,159 listings in April 2004, he said.
“We have seen a moderation in sales activity in general, but there’s always exceptions,” Miller said. “We came across a transaction that went to contract [in early May] that had 11 backup offers and sold at more than 10 percent above list.”
Much of that frenzied activity is still taking place in apartments priced in the $750,000- to $2- million range, Miller said. Brokers agreed.
“The market is segment by segment,” said Deanna Kory, a senior vice president with The Corcoran Group with two decades of experience, who currently is working in almost every price range as well as all over Manhattan. “The smaller apartments, or if the apartment’s perceived to be priced well, those things are selling very quickly.”
Kory said she recently has been struggling to move a charming classic seven located off Park Avenue on the Upper East Side priced at $1.795 million after reducing the price from $1.995 million.
“We would have had a bidding war and have been off the shelf three months ago, and now if we show it half a dozen times a week, we’re lucky,” she said.
However, Samantha Kleier Forbes, a vice president at Gumley Haft Kleier, works the $2 million and under market on the Upper East Side and said the market’s on fire for two-bedroom or convertible three-bedroom condominiums or co-ops.
“Everything is a bidding war,” she said. “It just seems you can’t get into apartments fast enough in that price range.”
Her sister, Sabrina Kleier Morgenstern, another vice president at Gumley Haft Kleier, has been having a similar experience on the Upper West Side with condominiums between 60th and 92nd streets.
Kory said the market sluggishness she has experienced with larger apartments like her Upper East Side listing may be creeping to Downtown. But the Upper West Side is still thriving.
“The Upper West Side still seems to be going strong on family-sized apartments, and it is not as slow as the other two areas,” she said.
According to Miller, from March to April, inventory of co-op apartments grew 2.4 percent, while that of condos grew 6.4 percent. Townhouse inventory has increased 7.4 percent and lofts even more at 11.7 percent. Perhaps that more rapid inventory growth in units that are often luxury units is wreaking havoc on pricing strategies some brokers have become accustomed to over the past two or three years.
Michele Kleier, president and chairman of Gumley Haft Kleier, who handles more expensive apartments than her daughters, said she believes the slowdown has hit apartments priced about 15 percent higher than they should be in anticipation of unusual appreciation rates of 20 percent a year continuing.
“Very often brokers will price an apartment way higher than they should, because they want to get the exclusive,” she said. “They tell the seller what they want to hear.”
Leonard Steinberg, a broker with Prudential Douglas Elliman, agreed that the market is seeing price reductions but only on unrealistic asking prices, not on selling prices.
“In a market as heated as we’ve had the past six months, if you have 15 to 20 percent escalations, people put properties on the market anticipating that these escalations will go on forever and ever,” he said. “That’s not the real world.”
So asking prices may be coming back down to earth, and ridiculously priced units may be languishing on the market, but that doesn’t mean it’s a bearish market, brokers caution.
“It’s the end of 20 percent per year gains,” Steinberg said. “That’s not a cooling off, that’s a calming down.”
Kory agreed. “Historically, what we’re experiencing is really pretty standard,” she said. “It’s just we’ve had such craziness the last two or three years.”
And since one broker’s bread is another broker’s poison, the rental market has found itself booming at the same time the sales market has taken a languid turn.
“It’s the strongest rental market I’ve seen since Sept. 11, 2001,” said Gordon Golub, manager of the Upper East Side office of Citi Habitats.
Vacancy rates were lower over the winter than is typical, he said. That’s because landlords and management companies, suffering from the huge concessions given brokers or tenants over the past three years, worked hard to retain their tenants this winter – a time when many tenants move on to seek better rental deals, Golub said.
That has kept inventory low and activity high, and as of the second week of May, Golub had seen a 5 percent increase in prices since the beginning of spring.
“Gramercy down to Tribeca, there’s been more like a 10 percent increase,” Golub said.
Incentives for renters are shrinking, except in far-flung areas, as frustrated buyers from a sizzling sales market continue to turn to rentals.
Kory said she is working with a rental agent to market the Beekman Regent at 351 East 51st Street who is getting more calls for rentals than she is as the sales agent.
“We just put these on as sale and rental,” she said. “About two or three months ago, we would have been called equally, if not me getting more calls, but now he’s getting significantly more calls than me.
“That tells you what’s going on.”