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Fourth Quarter 2009 Manhattan Luxury Apartment Market Reports


By Carter B. Horsley

Fourth quarter reports about Manhattan's luxury condo and co-op apartment market indicate a slight improvement with increased sales and lower inventories.

In his report for Prudential Douglas Elliman, Jonathan Miller of Miller Samuel Inc., said that "there were 2,473 sales in the fourth quarter, up 8.4 percent from the 2,282 sales in the prior year quarter and up 10.9 percent from the prior quarter," adding that "This level of activity was more than twice the 1,195 sales seen in the first quarter of 2009, which had been lowest level of sales in nearly 15 years."

Mr. Miller said that "there were 6,851 active listings at the end of the quarter, a 24.6 percent decline from 9,081 listings in the same period a year ago, but down 18.3 percent from the 8,369 listings in the prior quarter." "Excess inventory was worked off the surge in summer and fall sales activity, ordinarily seen during the spring market," he said, adding that "This drop in the number of listings was also compounded by the seasonal trend of sellers withdrawing listings over the end of the year holiday season and re-listing in the New Year." He also noted that "this decline in listing inventory does not include the 'shadow inventory' of stalled new development projects, which is estimated to be in excess of 6,000 units."

Prices, however, continued "to show weakness," according to Mr. Miller, noting that "the median sales price of a Manhattan apartment was $810,000 in the fourth quarter, 10 percent below $900,000 in the prior year quarter and 4.7 percent below the $850,000 in the prior quarter." Average sales prices, he continued, fell 12.7 percent from the prior year quarter to $1,296,156 but the average price per square foot of $1,176 was only 0.6 percent lower than the prior year quarter. Listings took an average of 204 days on the market to sell in the fourth quarter, he said, up 28.3 percent from the prior year quarter.

"Buyers, sellers and real estate professionals have slowly adopted to changes including stringent, if not irrational mortgage underwriting, elevated unemployment and layoffs, lower compensation, a sharp price correction, shadow inventory, first time home buyers tax credit, rising foreclosures, declining appraisal quality, expanding marketing times and a host of other challenges. While the increased level of sales in the second half of 2009 was encouraging, a true housing recovery will be marked by a meaningful decline in unemployment and greater consumer access to credit," Mr. Miller maintained.

The Brown Harris Stevens report for the Fourth Quarter indicated that "co-op prices averaged $990,921," 10 percent lower than a year ago and "declines continued to be led by three-bedroom and larger co-ops" whose average sale price declined to $3,001,012 from $4,279,841 a year ago. Condos, on the other hand, the report continued, saw prices rise slightly from a year ago with "a 33 percent increase in the average price of three-bedroom and larger condos" to $4,574,080 from $3,443,710 a year ago.

The average price for lofts in the fourth quarter was $1,017, six percent higher than the prior quarter but 14 percent below a year ago, the report said, adding that buyers paid an average of 95.4 percent of the seller's last asking price for apartments that were not new developments in the fourth quarter, "up slightly from a year ago."

It found that on the Upper East Side prices for studios fell 12 percent over the past year, while one-bedroom prices fell 19 percent, two-bedroom prices fell 22 percent and apartments with three or more bedrooms fell 20 percent. Prices on the Upper West Side, however, it continued, fell less.

The Halstead Property report found that the average price per square foot for condos on the Upper East Side fell to $1,168 in the fourth quarter from $1,378 the year before, and that the average price per room of pre-war co-ops there fell to $348,425 from $422,393 the year before while the average price per room of post-war co-ops there fell to $204,713 from $238,700.

On the Upper West Side, the Halstead report found that the average price per square foot of condos fell to $1,267 from $1,455 the year before and that the average price per room of pre-war co-ops there fell to $215,967 from $239,806 the year before while the average price per room of post-war co-ops fell to $189,264 from $216,967 the year before.

The report said that the average price per square foot of condos downtown rose to $1,326 from $1,262 the year before. It also said that the average price per room of co-ops in Northern Manhattan rose to $120,601 from $107,217.

"This quarter there is reason to be hopeful that the significant devaluation we have tracked since the demise of Lehman Brothers is coming to an end. Values are still down significantly compared with 2008 (median prices are 15 percent lower than they were one year ago' average price per square foot is 17 percent lower). However, prices in the Fourth Quarter were essentially unchanged from the Third, suggesting that buyers and sellers reached price equilibrium after twelve months of downward pressure. This was particularly apparent in the comparison of quarter-over-quarter resales: the median price for a re-sold apartment in the Fourth Quarter was $725,000, down 3 percent from the prior quarter; while the average price per square foot rose 1 percent to $936," Pamela Liebman, chief executive officer of The Corcoran Group, reported.

"Additionally," she continued, "there is a clear and growing confidence overtaking consumers as the number of transactions in this quarter easily outpaced the prior year. Overall there were 48 percent more closings this quarter than in the Fourth Quarter of 2008, and 64 percent more re-sale closings. With homeowners reluctant to list their properties and savvy buyers taking advantage of price reductions, the total available inventory has decreased 36 percent since its peak in March, gradually reducing the broad selection buyers had to choose from."

"The rumored influx of significant bonus money in the financial sector and the promised repayment of TARP funds by Citibank and Wells Fargo are promising indicators for sales activity and buyer confidence in the new year," Ms. Liebman maintained


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