Manhattan apartment listings became more plentiful last month, rebounding from a steep drop in December but still not nearly meeting demand, brokers and appraisers say.
From November to December 2004, the number of exclusive listings available for sale plunged 16.4 percent to 3,922 available apartments, the largest month-to-month drop in five years, according to Jonathan Miller, president of real estate appraisal company Miller Samuel.
The numbers rebounded in January, with the addition of 663 apartments for a 16.9 percent increase to 4,585 apartments about the same as levels this past Thanksgiving.
Inventory continued to grow in the first weeks of February, a runup to the springtime house-selling season.
“Sellers are anticipating a strong spring market, and we re starting to see inventory come back on,” Miller said. “It s normal in the first quarter to see inventory begin to increase because the second quarter has historically been the strongest quarter of the year in terms of volume and price levels.”
Still, some brokers said they d seen little evidence of growing numbers of available apartments, particularly in the ultra-luxury bracket. Even with the January rebound, inventory is still well below levels seen just six months ago.
“There s just so little to show, it s tough,” said Elizabeth Sample, a broker with Brown Harris Stevens. “We re not seeing a lot of new inventory coming on, which is surprising. Maybe after President s Day we ll see more.”
Eager Wall Street executives bearing large bonus checks, up anywhere from 8 to 15 percent over last year, are driving demand. Though the checks are paid out in February, once executives learn their bonus amounts in December, many start attending showings almost immediately. “Wall Street is out in force,” Sample said.
Another factor in the buying frenzy is falling mortgage rates, despite short-term interest rate increases made since June 2004, Miller said. The 30-year fixed-rate mortgage went up for the first time this year in the week ending Feb. 17, rising 3 basis points to 5.62 percent, according to Bankrate.com.
“The long-term rates are still going opposite generally from short-term rates,” Miller said. “So the low mortgage rates all along are what s been fueling this real estate boom. That has become more acute because mortgage rates have continued to trend downward, yet economic conditions, while certainly not robust, have been improving.”
Refinancing is also back on the upswing, according to a report from appraisal company Mitchell, Maxwell & Jackson. Though the company only uses transactions it s involved in directly and thus has a small sampling, it saw a 54 percent increase in January s refinance volume over December, with 224 refinancings versus 145.
“This was due to a shift out of adjustable rate mortgages and into hybrid products like the 5/1s, 10/1s and the more traditional 30-year fixed rate mortgages,” said Jeffrey Jackson, chief economist at Mitchell, Maxwell & Jackson.
Adjustable rate mortgages have rates and payments that can change monthly, and have been popular in recent years due to their low monthly payments. But due to the Federal Reserve s increases in discount rates over the past year, these types of mortgages have become less desirable.
“We re already seeing it in our own practice,” Miller said. “I think we re going to see an uptick in refi volume over the next quarter.”
Particularly striking has been the amount of activity in the high-end of the market where apartments cost $5 million or more, Miller said.
“We saw an uptick at the end of the year in 2004, and that appears to be continuing,” he said. “While conventional wisdom would say people in that demographic are not as affected by mortgage rates, it s still a significant component.”
Although many new high-end units were finished in 2004, inventory is still low. Sample said she had about 40 to 50 units to show in the $20 million and above market last spring, while this year she has only about 15.
One group of buyers everyone expects to arrive hasn t shown up yet: Europeans and other foreigners taking advantage of a favorable exchange rate.
“We re being told that they think the dollar may fall further,” Sample said.
TRD