Manhattan apartment prices held steady in the fourth quarter of 2012, while inventory declined dramatically during the same period. The average sales price came in at $1.46 million in the fourth quarter of 2012, rising just 1 percent year-over-year, according to Douglas Elliman’s quarterly market report. Overall, 2,598 units were sold in the fourth quarter of 2012 — up 29.2 percent from the fourth quarter of 2011 when 2,011 units sold, the Elliman report said.
Manhattan inventory dropped 34.2 percent year-over-year to 4,749 from 7,221; quarter-over-quarter, inventory declined some 18.8 percent. But in the upper 10 percent of the Manhattan market, inventory was down just 9.6 percent year-over-year to 953, and down 15.7 percent quarter-over-quarter, according to the Elliman report.
Meanwhile, the absorption rate — the number of months it would take to sell the amount of homes currently on the market — fell 49.1 percent to 5.5 months from the fourth quarter of 2011, according to the Elliman report. The report’s author, Jonathan Miller, said Manhattan’s fourth quarter absorption rate is at its lowest since he began compiling data 12 years ago. As a result of modestly rising sales prices, low inventory, a low absorption rate and falling interest rates, the market has “essentially reached the end of [its] rope,” said Miller, the president of the real estate consulting firm Miller Samuel.
“[The data is] based on artificially low rates and [the] surprisingly very tight credit is also what is driving this market,” Miller said, noting that this situation is not unique to New York. “So, in other words, in an unusual way, this is the way out of [the recession]—this artificially induced recovery.”
Dottie Herman, the CEO of Douglas Elliman, said the firm had closed more transactions in the fourth quarter of 2012 than in any quarter during the past 25 years. She attributed the deal making to the expiration of the Bush-era tax cuts, and changes to capital gains and inheritance taxes. “You’re going to see a tight market,” with prices rising in 2013, Herman said. “The people that waited [to enter the market] were buyers. Sellers didn’t wait. There’s nothing to wait for.”
The Corcoran Group’s fourth quarter report showed that “strong demand” drove the approximately 20 percent increase in sales, despite the record low inventory levels. According to Corcoran’s report, the fourth quarter saw approximately 3,200 closed sales in the fourth quarter of 2012 down from just above 2,500 closed sales in the fourth quarter of 2011.
And Streeteasy data revealed that 2,548 contracts closed in the fourth quarter of 2012 — a 20.2 percent increase from the same time last year. Meanwhile, the number of broken contracts decreased 11.5 percent to 138, from 156.
Halstead Property’s fourth quarter report, meanwhile, shows that the average price of a Manhattan apartment increased 7 percent to $1.49 million from the same quarter of 2011. The report attributed those numbers to the 44 percent increase in the number of sales over $10 million, year-over-year.
“We’ve had a very good year,” Diane Ramirez, president of Halstead Property, said. “It’s been more than three years into the recession, [and we’ve had a] steady but sustained housing recovery. Watching that continue and having another excellent year bodes well for 2013.”
Halstead found that co-ops, on average, sold for 12 percent higher than in the fourth quarter of 2011, increasing to $1.29 million from $1.15 million. Meanwhile, average condominium prices fell slightly in 2012 to $1.81 million from $1.83 million at the same time in 2011, the report said.
Apartments prices in new developments held steady, increasing 3 percent year-over-year — currently to an average of $1,244 per square foot, Brown Harris Stevens’ fourth quarter report showed. Meanwhile, units that closed in the fourth quarter spent 7 percent less time on the market than they did in the fourth quarter of 2011, equal to approximately 114 days, the report found.
However, Miller’s report found that the average sales price of a new development unit fell 5.1 percent from the fourth quarter of 2011 to $1.86 million from $1.96 million, year-over-year. “We’ve largely absorbed all that excess product,” Miller said. “It’s either been repurposed for other use or it’s been repriced and sold off.”