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Sales still falling in Manhattan

Real estate professionals say buyers are in the driver's seat

Residential sales in Manhattan continued to slide in the second quarter, according to market reports released today, falling back from last year’s lofty peaks.

Real estate and appraisal company Miller Samuel, in a quarterly report prepared for Prudential Douglas Elliman Real Estate, reported that sales of all co-ops and condos fell 21.8 percent in the second quarter compared to the same quarter last year, with inventory swelling 31.2 percent and the median sale price rising 14.5 percent.

In a separate report, real estate data company and The Corcoran Group reported a 38 percent year-over-year drop in sales in the second quarter, with the median sale price up 13 percent.

"This is like the first-quarter redux," said Jonathan Miller, president and CEO for Miller Samuel. "We saw elevated prices, rising inventory and a lower level of sales activity."

And while sales are down compared to 2007, they are well above average for the past five years, he said. The second quarter of 2007 had the highest quarterly sales total for the past 20 years tracked by Miller Samuel, he said.

Price statistics are "somewhat mixed" in the second quarter compared to the first quarter, Miller said, with the average sale price falling 3.1 percent, the average price per square foot falling 2 percent and the median sale price rising 8.4 percent in second-quarter 2008 compared to the previous quarter.

Those mixed signals suggest "a leveling off or stabilization" in pricing, he said, "which is logical" given the state of the credit market. "The buying power for the consumer — whether it’s Manhattan or anywhere else in the country — is far less than it was a year ago, with few exceptions."

Miller added, "I’m more worried about ’09 than ’08," as there is an expectation that there will be more layoffs on Wall Street and that the bonus pool will shrink for Wall Street employees. He said he expects that the market will be "moving sideways" for the remainder of the year.

"The local economy is doing OK," he said, and he does not foresee any major changes to the state of the credit market for the remainder of the year. Sales were up 35 percent in the second quarter compared to the first quarter — the second quarter is typically a more active period for home sales, according to the Miller Samuel report.

The PropertyShark-Corcoran report found that the average sale price dropped 1 percent, the median sale price rose 3 percent and sales fell 7 percent in second-quarter 2008 compared to the first quarter.

That report also found that the average sale price rose 27 percent, the average price per square foot rose 16 percent, and the median sale price was up 13 percent year-over-year in the second quarter.

Mitchell Hall, an associate broker for Coldwell Banker Previews International in Manhattan, said, "I think the market has really turned to more of a buyer’s market," and buyers seem to have more wiggle room these days in negotiating prices and other concessions with sellers.

"Everything’s very negotiable right now," Hall said. "Where a year ago a buyer would … insult a seller making a lowball offer, now everything is being considered."

He cited the slow-moving economy among the factors contributing to slowing sales. "They are not grabbing things right away as they were previously. They are … taking a wait-and-see attitude."

Those buyers who purchased in the past year will likely lose money if they try to sell in the current market, he said.

While there are still first-time buyers in the market, Hall said that larger down-payment requirements are difficult for some buyers. "It’s a little tougher getting mortgages right now." The co-op market, he said, typically requires a 20 percent down payment and in some cases a 25 percent down payment, and for condos most lenders are requiring at least a 15 percent down payment, he said.

There are plenty of homes for buyers to choose from, he said, citing a couple who found 80 properties that matched their criteria.

Patricia Levy, a Realtor and vice president for Prudential Douglas Elliman, said that properties are taking longer to sell these days. "The sense of urgency is gone," she said, and buyers are taking their time in looking at properties.

"Buyers have more choices. They feel like they’re in the driver’s seat so they can negotiate a little harder. Their attitude is, ‘Hey, maybe in three months or six months the price will be even better,’" she said, though properties do continue to sell.

Levy reported that she closed about four sales transactions in the past month — mostly entry-level studios and one-bedroom units.


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