Manhattan’s residential market has a jump on the spring season — traditionally the busiest season of the year for sales.
As early as mid-February, brokers were boasting about bidding wars and industry insiders were speculating on whether the number of homes sitting on the market would decline as sales activity increased.
“The preliminary numbers for January are outstanding. It’s one of the strongest Januaries that we’ve seen in the last five years,” said Kelly Mack, president of Corcoran Sunshine Marketing Group. “If January is an indicator of where the rest of the first quarter will take us, the market is as strong as ever.”
Average prices for the fourth quarter were down 5 percent. Because sellers are lowering their prices, buyers appear to be taking the bait.
The number of sales was up 19.4 percent in January compared to the year before. There were 456 contracts signed in January 2007 and 382 signed in January 2006.
Richard Leitner, a vice president at Corcoran, says that his clients are reducing prices for properties, which are then selling at or above the asking price. On average, Leitner says well-priced properties are selling for 4 to 5 percent over the asking price, thanks to bidding wars.
“There has been a lot of buzz over the course of the year about increased inventory and a softening market. A lot of buyers on the sidelines aren’t going to pay full price in this market — they aren’t even going to look if it’s not a real deal,” said Leitner. “In turn, buyers are targeting the best-priced inventory that winds up in competitive bidding and goes over asking price.”
The market determines where something trades, not individuals, Leitner added. “When more than one person is willing to pay, it can drive the price up,” he said. While the market is tighter than it was six months ago, inventory levels are still not necessarily low.
Inventory saw an impressive 22 percent drop from the third to fourth quarter of last year. However, those inventory levels rose in January.
According to appraisal firm Miller Samuel, inventory in January was up to 6,167 units from 5,934 units in December 2006 — slightly lower than where it was last year at this time, with 6,215 units.
Inventory is expected to increase as sellers list their properties in anticipation of an active spring market — a seasonal pattern, says Miller Samuel president and CEO Jonathan Miller.
Miller added that he doesn’t expect any spikes in the level of housing stock in the near future.
Meanwhile, the number of sales of existing inventory is reaching a record level for this time of year, with sales of one-bedrooms particularly active.
One-bedroom units, which were a slower segment of the market last year, are going into contract well over the asking price, says Steve Klym, a senior managing director at Warburg Realty.
According to Miller, one-bedrooms are heating back up because buyers waited on the sidelines last year, choosing to rent one-bedrooms instead. Now, he said, they’re tired of paying rent and want to buy.
At 77 Seventh Avenue in Chelsea, Klym sold a one-bedroom over the asking price after four immediate bids.
“Really, it’s one-bedroom units anywhere that are appropriately priced and in good condition,” Klym said. “For one-bedrooms, prices are hovering around $600,000 to $800,000.”
But bidding wars don’t mean prices are sky high. Overall, brokers agree that the market is not as frenzied as it was two years ago, though buyers are willing to pay above asking price if they’re still getting a deal.
Doug Russell, a senior vice president and managing director at Brown Harris Stevens, says the bidding wars are occurring more in the resale market in good areas than in new condo buildings.
“You start seeing bidding wars when there isn’t much inventory,” Russell said. “And there is a lack of [resale] inventory at most levels.”
According to Russell, there have been few listings he’s been able to show for immediate delivery in Chelsea.
“Buyers want something right away and there is very little out there,” he said. “Even if the dollars are right, in most areas it’s hard to find more than half a dozen things to look at.”
Of course, contributing to this scenario is the fact that there is a lot of new development for sale, but not immediately ready for occupancy, brokers said.