Mixed results for second quarter Manhattan sales
Real Estate Weekly
Manhattan residential sales volume increased in the second quarter, compared to the first quarter, but price indicators were mixed, with some increases resulting from larger units selling, according to reports from the city’s major brokerages and the website StreetEasy.
According to Prudential Douglas Elliman, overall sales were up 10.7% compared to the previous quarter, but 3.8% less than the second quarter of 2010, a period that was boosted by a federal tax credit for first-time home buyers.
Elliman’s median sales price was down 5.5% to $850,000, compared to the previous year. But average sales price, at $1.45 million, was up, due in part to buyers’ preferences for larger units. The luxury market, defined as the top 10% of the market, had a quarterly increase in median sales price of 11.2% to $4.55 million, as larger units sold.
“Everything that’s priced well sells,” said Dottie Herman, president and CEO of Prudential Douglas Elliman, who cited low interest rates as motivation for buyers. “It really is a good time to buy.”
The Corcoran Group reported 3,180 sales in the second quarter, up 15% from the first quarter, but down 14% compared to the previous year.
Corcoran’s median price increased 4% compared to the previous quarter, with average price per s/f increasing by 2%. Two-bedroom apartments had the largest median price gain of 9%. The luxury market had a median price to $4 million, up slightly compared to the previous year, but price per s/f was down compared to the first quarter, which was boosted by a $48 million sale at the Plaza Hotel.
New developments saw a 20% decrease in median pricing, according to Corcoran, due to high inventory.
“While there was activity at a few high-end properties, the bulk of new property sales were in developments trying to sell their remaining inventory by offering terrific value to buyers or which came to market post-downturn and were priced competitively for rapid absorption.” said Pamela Liebman, president and CEO of the Corcoran Group, in a statement.
According to StreetEasy, median closing prices increased by 2.5% compared to the previous year. Closings in the luxury market made up 11% to 12% of the overall closings, matching its percentage during the peak.
“I would say the luxury market is picking up a larger portion of closings and contracts,” said Sofia Song, vice president of research at StreetEasy.
The number of closings declined by 12.3% compared to the last year, but was up 32.5% from the first quarter of 2011, which Song attributed to seasonal trends.
Absorption – which StreetEasy defines as the number of listings sold or taken off the market, divided by the total inventory – was 34% of 14,306 listings. The percentage is down slightly from the 35% absorption in the first quarter of 2011, suggesting that some slowdown may be occurring.
Brown Harris Stevens reported an average Manhattan sales price of $1.43 million, up 5% compared to the previous quarter. The median sales price was $835,000, down 1% from the past year.
Co-ops appeared to do well, with a year-over-year median price increase of 11%, while condo median price declined by 10%, compared to the previous year, according to Corcoran. The average year-over-year price of co-ops was up 14%, according to Brown Harris Stevens, due to a jump in sales over $10 million.
“As economic growth in New York City continues to outpace the national average, we are cautiously optimistic for several reasons including the fact that a majority of Manhattan’s owned homes are cooperatives,” said Hall Willkie, president of Brown Harris Stevens Residential Sales, in a statement. “If we discount these high-end sales, I believe the average price in most categories would essentially remain stable. With building permits substantially down, low inventory will continue to be a factor.”
Apartments of three or more bedrooms made up 20% of the contracts, according to StreetEasy, the highest percentage in three years. The increase in sales of larger units was attributed to more families deciding to stay in Manhattan, and some developers are responding by increasing unit sizes.
“We’re very bullish on the larger apartments,” said Hal Fetner, president and CEO of Durst Fetner Residential, which is beginning sales at 1212 Fifth Avenue, a condo converted from a Mt. Sinai hospital building, with a mix of one, two and three-bedroom units. Prices are an average of around $1,300 per s/f.
Fetner said that there remained a disparity between desirable, high-end product and the middle of the market, particularly for new development.
“The condos that are coming online right now, in these timeless locations, are starting to see a lot of traffic,” said Fetner. “The condos that are in marginal locations aren’t enjoying the same success.” He added that strong sponsorship was also a factor.
Despite some gains, experts cautioned that concerns over financing, potential Wall Street layoffs and unemployment could hold back additional progress. An increase in interest rates would dim some buyers’ prospects of securing mortgages.
“I still don’t see this as a recovery,” said Jonathan Miller, president of Miller Samuel, the appraisal firm that prepared the Elliman report. “It’s more of a rebound. The way I would characterize this market is stable, but fragile.”
Although the vacancy rate remains tight for rents, and concessions have almost disappeared, the majority of New Yorkers continue to rent instead of buying. Some new developments, such as the Related Companies’ MiMa and Forest City Ratner’s 8 Spruce Street, have high-end amenities that match those of condos, making buying less of an immediate concern for some tenants.
“I think a lot of people are happy renting now,” said Song. “If you want to buy, you have to come up with a large down payment.”
Experts said that any price gains are likely to be modest in coming quarters, and unemployment and financing remain crucial for sustainable growth.
“I think we just have a very long road of recovery,” said Song. “We will bounce along the bottom.”