A grey cloud hovers over the Manhattan real estate market as buyers and sellers wait to see how the market adjusts to last summer’s credit crisis, how deep the Wall Street job cuts will actually be and how much the housing market will
be affected.
In the first quarter of the year, the market was not promising, with sales decreasing and homes sitting on the market longer,
according to the first-quarter report by appraisal company Miller Samuel. Home prices, however, were up at the beginning of the year.
There were 2,282 sales in first-quarter 2008, a 9.4 percent drop from the fourth quarter in 2007, and a 34.3 percent plunge from first-quarter 2007.
Homes languished on the market for an average of 146 days in the first three months of the year, up 11.4 percent from the prior quarter and 11.7 percent from first-quarter 2007.
On a positive note, the average sales price was $1.7 million, up 19.7 percent from the prior quarter, and up 33.5 percent from
the prior year quarter. The number was likely skewed upward by a limited amount of very high-priced closings at new developments including 15 Central Park West and the partly converted Plaza Hotel. The median was up as well, to $945,276, 11.2 percent higher than the prior quarter,
and 13.2 percent over the prior year quarter.
Sales could pick up this month, although not at a rapid pace, and low- to mid-level prices will likely not increase, brokers said.
“We will see a slight bump in transactions, but I believe you
will start to see the average price on apartments below the $3 million mark start to drop a bit,” said Jeff Krantz, vice president of sales and marketing at City Connections Realty.
Steen Rasmussen, senior vice president and sales manager of the downtown office of Warburg Realty Partnership, said due to a number of factors, including the fact that the traditionally busy spring season is upon us, he expects “activity to pick up, although at a significantly slower pace than the same time last year, with 70 percent of sellers who put their properties on the market in the past months possibly lowering prices. Developers are also going to step up their marketing efforts to the brokerage community.”
Inventory rose, at least in part because sellers list their properties in anticipation of the busy spring market. There were 6,526 co-ops, condos and townhouses on the market in March, up 4.8 percent from February’s 6,225 units, appraisal firm Miller Samuel determined. The inventory increase was bigger than last year. The number of listings between February 2007 and March 2007 rose 1.2 percent.
Although not always the case, the rising number of available homes might also be linked to the slowing pace of sales.
“We are seeing a continuation of the past few months. Buyers are taking longer to evaluate properties, which in turn leads to apartments staying on the market for a bit longer,” said Krantz of City Connections Realty. Barak Dunayer, president and founder of Barak Realty, said “activity is slower yet very healthy.”
The rental market continues to show weakness. In the first quarter of the year, the average rent for studios through three-bedrooms dropped 1.4 percent, according to a report from Citi Habitats. January’s average was $3,221, February’s was $3,180 and March’s was $3,177. The decline between February and March was smaller than the drop the prior month.
But between first-quarter 2007 and first-quarter 2008, the average rent dropped a larger 3.9 percent, according to the market report from Citi Habitats, to $3,193 from $3,322.
Will April showers bring May flowers?
To assess market conditions, The Real Deal distributed a survey to real estate pros last month. Here is what some of them had to say on a host of different topics.
Steen Rasmussen senior vice president and sales manager of the downtown office, Warburg Realty Partnership
Some sellers are reducing prices to levels that seem very reasonable. Developers are more negotiable. Still, buyers are fearful and are not seeing this as a unique buying opportunity. They often interpret a price drop as an indication that things are going to get worse rather than an attempt by the sellers to find the currently correct price level.
Max Dobens vice president on the Jacky Teplitzky team, Prudential Douglas Elliman
There is lots of uncertainty, deals are taking longer to get done and the gap between sellers and buyers is larger than before. You want to buy into “A” buildings now. Ones with amenities in good neighborhoods are more likely to weather any storm than buying in a fringe neighborhood.
Jeff Krantz vice president of sales and marketing, City Connections Realty
Outside of the tug-of-war over price with buyers, owners face issues with buyers being able to close. The mortgage lending business is unpredictable, and a lot can happen in eight to 12 weeks between contracts and closing.
Barak Dunayer president and founder, Barak Realty
The market is cleansing itself — less “irrational exuberance” and more value-driven activity. … Some buyers and sellers choose to wait on the sidelines to see what happens. It doesn’t make sense to try to time the market, but some people try it anyway.
Barbara Berzack director of new residential development, Atco Residential Group
The safest bet for May for investors are those neighborhoods with the broadest appeal and where there is little new condo development underway.
Kenneth Scheff executive vice president and director of sales for the downtown offices, Stribling & Associates
If an agent is a “rain maker,” regardless of how long they have been in the business, they are doing very well right now.
Compiled by Lauren Elkies