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Second Quarter 2009

Residential Reports for Manhattan

By Carter B. Horsley

Reports for the second quarter of 2009 released today indicated that the Manhattan luxury condo and co-op apartment markets continue to be weak and are faltering, although they have not collapsed.

The Brown Harris Stevens report noted that "an 82 percent decline in closings over $10 million helped bring the average cooperative price down 29 percent from the second quarter of 2008 to $918,795" while the average price of a condominium apartment declined only 18 percent from the previous year's second quarter but the report noted that if closings at The Plaza and 15 Central Park West were removed, the average condo price "would be just 2 percent lower than a year ago."

This report found that "new development apartments sold for an average of $1,198 per square foot," 16 percent less than the comparable period a year ago. It also noted that apartments spent an average of 129 days on the market, 48 percent longer than the same period in 2008 and that sellers received 92.6 percent of the last asking price for their units compared to 97.5 percent a year ago.

The Prudential Douglas Elliman report, prepared by Miller Samuel Inc., found that "there were 1,532 co-op and condo sales in the current quarter, 50.3 percent below the 3,081 sales of the prior year but up 28.2 percent from the prior quarter."

"Listing inventory is up a modest 7.8 percent to 9,378 units from 8,626 units in the prior year quarter, but fell by 10.2 percent from the prior quarter total of 10,445, the highest quarterly level in a decade," the report continued, noting that "First time and entry-level apartment buyers played a key role in the increase in activity this spring, albeit seasonal, with a 54 percent entry-level market share, up from 50 percent in the prior quarter."

"New development," the study declared, "has seen limited changes to pricing despite the fall market correction, reflected in the decline of new development market share. In the current quarter, market share of new development units sold fell to 27 percent from 35 percent in the prior year quarter and from 42.8 percent in the prior quarter. The 73 percent re-sale market share in the second quarter was at its highest level since the second half of 2007."

The report declared that "the days on market for Manhattan condos exceeded six months for the first time since this metric has been tracked over the past decade."

"In terms of reflecting the recession's initial impact, this quarter and the next will be the most telling in terms of establishing a new level of pricing for Manhattan," declared Pam Liebman, chief executive office of the Corcoran Group.

"It is no secret that, since3Q 2008, Manhattan's housing market has experienced one of its most challenging periods in twenty years," she said, adding that "in the wake of the global financial crisis, home sales in the borough have slowed by half. Total closings decreased 50-60 percent of 2008's busy second quarter, but were up by 10-15 percent over the prior quarter as of this writing and will most likely increase further (based on a reasonable estimate of additional Second Quarter sales reaching the public record at a later date). In addition trends in recent months have been very encouraging with strong seasonal activity in May and June, particularly in modestly-scaled units."

"As reduced demand and intense downward pressure has taken a toll on condominium prices (re-sale condos lost 14 percent in price per square foot), we have also seen a resurgence of the co-op market as buyers have found their prices more attractive," according to Ms. Liebman.

"Townhouse sales in every neighborhood were down approximately 40 percent of more versus last year," according to the Corcoran report, which also found that "the loft market experienced a 25 percent decline in median price to $1,420 million and a 10 percent decline in average price per square foot to $1,083."

The report from found that "Condo and co-op resale median prices have actually increased since last quarter but are still significantly down from a year ago," adding that "the new development sector has finally begun to reflect the economic climate of the last two quarters as closing prices have suffered declines since last quarter and last year, causing the overall Manhattan sale price to drop by 10.6 percent since last quarter to $760,000, and by 19.1 percent since last year."

"Condo resale median price increased to $999,000," according to the Streeteasy report, "with an 11.6 percent increase since last quarter but an 11.2 decrease since last year. Average prices are increased 0/7 percent for the quarter, but are down 17.4 percent since last year. Co-op resale median price increased to $580,000, an increase of 4.5 percent compared to last quarter but a decrease of 14.1 percent since last year. Average sales price increased by 2.8 percent since last quarter but decreased by 23 percent since the prior year. New development median sales price decreased by 15.3 percent since last quarter to $1,078,000 and decreased by 10 percent since last year. Average sales price also decreased by 13.5 percent since last quarter and by 10.9 percent since last year."

Streeteasy reported that "there were 2,477 listings that went into contract this quarter, an 82.4 percent increase from last quarter's number of new contracts (1,358)," but it noted that "there were 132 broken conracts, a 22.2 percent increase compared to last quarter's 108."


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