February 29, 2024

After Months of Growth, Signs of Weakness in the Manhattan Real Estate Market

After more than a year of slow but steady growth, the Manhattan real estate market saw declines in price and sales volume in the first three months of 2011, raising the question of whether the city may finally be following the rest of the nation into a double dip in housing prices.

Sales reports to be released on Friday by the city’s largest brokerage firms varied in their conclusions, but each report showed some signs of weakness. Reports from Halstead Property and Brown Harris Stevens were the gloomiest, indicating that after six quarters of consistent growth, the average apartment price fell 5 percent, to $1.36 million, and that the number of sales this quarter, 1,769, was down 23 percent from the same time last year.

Data provided by Streeteasy.com mirrored those trends, with average prices down slightly from last year and sales volume dropping by 21 percent. The Corcoran Group showed the number of sales up 6 percent from last year, but the average price down by 4 percent, and Prudential Douglas Elliman showed steady sales volume, but the median sales price at $782,071, down by 9.9 percent from 2010.

Despite these negative signs, brokers and market analysts said it was too soon to declare dark days ahead for Manhattan real estate.

“Some people may think we’re seeing the beginning of a decline, but just as it was too early to call a recovery after one quarter of price increases, it’s too early to call a prolonged pullback after only one weak quarter,” said Gregory J. Heym, the chief economist for Halstead and Brown Harris Stevens. New York City’s economy is doing too well for such pessimism, he said, adding that the finance sector added almost 11,000 jobs in the last year.

Hall F. Willkie, president of Brown Harris Stevens, said that while volume was down, the number of sales last year was inflated because of the federal tax credit for first-time homebuyers. “There was a real scramble to beat the deadline,” he said. “So sales were really explosive last year, and I never would have predicted it, but last year turned out to be our strongest year in history.”

The market reports count deals that have closed in the previous quarter, but for the first time, Elliman’s report includes a price index for sales that are in contract but have not yet closed, which shows a 7.1 percent increase from the same time last year, suggesting that next quarter’s report will show an upswing in prices.

Pamela Liebman, chief executive of the Corcoran Group, said that Corcoran’s signed contracts in March also showed an increase of 23 percent in average sales price, to $1.476 million this March from $1.195 million last year. “That’s a pretty big uptick,” she said.

Ms. Liebman and other brokers also said that the luxury market was continuing to do very well. She said that Corcoran agents had closed nine deals worth more than $10 million so far this year, while there were only four such deals for the same time last year. “That tells me there’s a lot more confidence in the market,” she said.

Jonathan J. Miller, the president of the appraisal firm Miller Samuel and the author of Elliman’s report, offered a reason why prices had come down and said that the mix of what had sold in 2011 suggested that prices were essentially flat. While higher-priced condos accounted for more of the properties sold last year, he said, the number of co-ops sold went up significantly this year, and because co-ops tend to be priced lower than condos, that trend pulled average and median prices down.

“Condo sales were down only because inventory is down, but co-ops showed a burst in activity,” Mr. Miller said. “If you put that all together with the fact that last year’s bump was somewhat artificial, you see that the market today is weak, but essentially stable.”

Diane M. Ramirez, president of Halstead Property, also dismissed the notion of the market’s taking a double dip. “When you’re comparing 2010 to 2011, you have to remember that we had a very unusual volume of business last year,” she said, noting that in addition to the tax credit, there was enormous pent-up demand after a very tentative market in 2009. “And now, we’re kind of back into a healthy and normal cycle.”

She said that Halstead agents were already seeing signs of a typical spring bounce. “Showings are up, open houses are busy and offers are coming in at all price points,” she said.

But Dottie Herman, chief executive of Prudential Douglas Elliman, sounded a cautionary note. The continued difficulty that buyers face when trying to get a mortgage may still hamper the market, she said. “For the market to be really healthy again,” she said, “you have to fix the financing piece, and that’s still up in the air.”

Article source: http://feeds.nytimes.com/click.phdo?i=d247c457c298c74e1ff44d69a68ed8cf

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