There are more Manhattan apartments on the market than before, but are they all really for sale?
In the second quarter of 2006, there were 7,640 residential listings in Manhattan, a 10.7 percent increase over the first quarter’s 6,904, according to the appraisal firm Miller Samuel. The year-over-year comparison is even more striking, with the number of listings in the second quarter 53.9 percent higher than the year before, when there were 4,965 listings for sale.
The question is whether some of these are “phantom” listings, posted by disingenuous sellers simply to assess the market value of their apartments.
Kelli Douglas, a sales agent at the Corcoran Group, said she had a client that was offering a “phantom” one-bedroom co-op on the Upper East Side. Douglas showed the apartment to 24 qualified buyers whose offers were within $20,000 of the asking price. “The seller was not willing to negotiate,” and pulled the listing off the market after less than three months, Douglas said.
“I think she had unrealistic expectations of what the apartment would sell for,” Douglas said. “If people are really serious about selling, they will price it right. When people are not as serious, they put it higher to see if someone bites.”
While such a seller can make buyers crazy, the practice is within the law.
“I think it’s morally wrong to say, ‘let’s let people walk through our apartment just to see how much we can sell it for,'” said Steven Spinola, president of the Real Estate Board of New York, “but it’s not illegal.” Indeed, a seller can renege on a deal up until the point a contract is signed.
While the “phantom” inventory charade isn’t new, it’s also not too common — brokers estimate that phantoms are 1 to 2 percent of all sellers. Jonathan Miller, president and CEO of Miller Samuel, said the phony sellers are just throwing the apartments in the market half-heartedly to see if they can cash out. “It’s almost like they’re getting an appraisal,” Miller said, or “an evaluation of the apartment.”
Spinola, from REBNY, suspects that homeowners with no intentions of selling become curious about the value of their units when news outlets feature stories of once bargain-basement apartments that are now selling for millions of dollars. “A good number of people will call brokers to see if they have that kind of apartment,” Spinola said.
“Those are people that are just testing the marketplace” to see if they can get top dollar, agreed Phyllis Pezenik, director of residential sales and leasing at DJK Residential. “It’s a dangerous game,” she added, because a buyer’s broker could later sue the seller for a commission.
In general, apartments are sitting on the market longer, with the number of days it took to sell a typical Manhattan apartment increasing in the second quarter to 144, compared to 102 days for the same quarter last year, according to Miller Samuel.
The number of sales dropped to 1,934 in the second quarter of this year, a 14.8 percent decrease from the same period last year. At the same time, second-quarter home sale prices rose 5.2 percent from the second quarter of 2005 to $1,386,193, Miller Samuel found.
On a national scale, there is a “plentiful supply” of homes available, said Walter Molony, spokesman for the National Association of Realtors, with 3.86 million homes on the market. The association found that home sales fell to a seasonally adjusted annual rate of 6.33 million homes in July, an 11.2 percent drop from 7.13 million in July 2005. The association projects that 6.54 million homes will be sold nationwide this year, a decline of 7.6 percent from last year, Molony said.
In Manhattan, new construction accounts for a large portion of the growing inventory, said Tristan Harper, senior vice president at Prudential Douglas Elliman. When it comes to finding the more exclusive kinds of homes his clients want, however, the selection is more limited.
“Either it’s not a prime location or it’s not the kind of apartment a buyer wants,” Harper said. “There is more property coming up, but not where they want.”
Barbara Fox, president of Fox Residential Group, agreed with Harper’s assessment. There is more inventory, but it’s “very sectional. The high-end in every size apartment is deficient in supply,” she said. As a result, many clients are “sitting and waiting for the right apartment to come onto the market.”