No more fear of fall
In sharp contrast to last year, brokers expect strong market this autumn
What a difference a year makes — at least when it comes to Manhattan’s residential real estate market.
As the fall of 2011 began, the country was reeling. Following the near-stalemate in Congress over raising the debt ceiling, Standard & Poor’s had downgraded U.S. debt.
Occupy Wall Street protesters began camping out in Zuccotti Park — a glaring reminder of an arrested economic recovery. And European leaders were struggling to resolve Greece’s debt woes, which threatened to topple neighboring economies and even spread across the pond.
The effects of the European debt crisis and a volatile stock market rippled through the Manhattan market in the following months, spooking buyers and sellers and denting deal volume for the remainder of the year.
It’s true that none of these problems are entirely solved: U.S. unemployment rates remain stubbornly high, Greece is surviving on E.U. bailouts, and the U.S. faces drastic spending cuts in 2013 if lawmakers fail to find an alternative to the so-called fiscal cliff.
But when it comes to Manhattan home sales, last fall’s worries are in the rear-view mirror.
If the prevailing mood last fall was fear of a double-dip recession, this fall brokers said they expect sales to continue outpacing 2011 levels and for prices to rise or — among some property types — to remain stable.
“The trajectory of the New York City sales market has been climbing steadily since the beginning of the year,” said Mark Ski, vice president of sales at Bond New York. “Interest rates remain low, and an overall feel that the economy is turning around really help fuel the fire in this marketplace.”
While some brokers are still keeping their fingers crossed, as of late last month, there were 2,856 Manhattan homes under contract, about 30 percent more than the same time last year, according to data from real estate analytics firm Urban Digs.
There were 5,292 active listings, or about 22 percent less than a year ago.
In the luxury market, signed contracts are also up compared to last year, according to Manhattan brokerage Olshan Realty. At press time, 52 contracts had been signed last month for Manhattan homes priced at $4 million or up — a 73 percent increase over the same period last year, and the strongest August since the firm began tracking the data in 2007.
In a stark contrast to last fall, brokers expect the frothy sales market to endure, considering the continued low interest rates, high rents and demand from wealthy overseas buyers who see Manhattan real estate as a relatively safe investment.
“During the first half of the fall … I anticipate the number of transactions to soar upward and the prices in the condo market to scale even higher,” said Linette Semino, an associate broker at Warburg Realty.
However, she said she expects co-ops to move slowly at the same prices.
“Co-op prices have become more realistic and in sync with the marketplace, especially in the studio and one-bedroom market, where the demand is not higher than the supply,” Semino said.
Indeed, the main factor restraining transactions, brokers said, is the shortage of available listings and newly constructed apartments — a phenomenon they’ve cited since buyer interest picked up in the spring.
“There is no shortage of buyers who are ready, willing and able to purchase,” said Beth Stern, a broker at Corcoran Sunshine Marketing Group who heads up sales at the Apthorp on the Upper West Side.
“The true challenge is Manhattan’s lack of inventory,” she said. “Purchasers are anxiously awaiting upcoming new development because most buildings being brought to market this year are selling very quickly, leaving them little time for deliberation.”
Additionally, some sellers may delay listing their homes this fall until the outcome of the presidential race is decided in November, Warburg’s Semino noted. Others may hold off for even higher prices, said Jacob Frydman, CEO of United Realty Partners, a Manhattan-based real estate investment and advisory firm.
“Sellers of properties in the luxury market — but not at the top of the market — are expecting to get prices that may not be achievable, and may be holding out because of the perception that prices are increasing, given some of the unique ultrahigh-price deals that have gotten done recently,” Frydman said.
Some brokers, including Prudential Douglas Elliman’s Jacky Teplitzky and MNS CEO Andrew Barrocas, expect transactions to drop in the fall because of a lack of inventory.
Fortunately, some 1,000 units are expected to hit the market by the end of the second half of 2012, double the number of the same period in 2011, Corcoran’s Stern said.
In the rental market, Sofia Estevez, an executive vice president at developer TF Cornerstone, which is currently leasing up luxury rental towers at 4540 Center Boulevard and 4615 Center Boulevard in Long Island City, said rents are up about 10 percent over last fall.
“At the end of last year, we were still heavily giving concessions,” she said. “This year, there is great traffic, very high occupancy, and also a very good absorption rate for our new projects.”
An influx of early career professionals in the fields of law, finance and consulting should bring high demand for rentals through mid-October, said Douglas Wagner, Bond’s executive director of leasing.
“This pressure will be consistent with last fall, and we anticipate continued low vacancy levels in every Manhattan neighborhood,” he said.