With inventory at near-record lows and prices inching up, all signs are
pointing toward a seller’s market for Manhattan real estate this spring.
The number of apartments for sale dropped 34.4 percent to 4,960 listings
in the first three months of the year — the largest year-over-year
decline in 12 years, according to a report by the Douglas Elliman brokerage firm.
At the same time, the number of sales went up 6.3 percent to 2,457 and
prices increased across all categories, with the median sales price at
$820,555, up 5.9 percent, according to the report.
With the exception of the second and third quarter of 2010, when prices
were buoyed by the homeowners’ tax credit, “that is the largest
year-over-year increase since Lehman fell” in 2008, said Jonathan J.
Miller, the president of the appraisal firm Miller Samuel
and the author of Douglas Elliman’s report. “If you choke supply by the
throat,” he added, the inevitable outcome is that “prices rise.”
All of this means a tough time for those looking to buy. “The demand is
across the board from studios to $50 million apartments, and there is
not enough supply,” said Pamela Liebman, the chief executive of the Corcoran Group,
which reported the median price was stable for the first three months
of the year compared with the same period in 2012. “There are more
bidding wars. There’s more frustration.”
While the average price was down 10 percent, Corcoran attributed that
dip to a shift in market share toward smaller apartments and resale
co-ops as more entry-level buyers, enticed by low mortgage rates,
decided to buy.
Reports by Brown Harris Stevens and Halstead Property,
however, showed the median price down by 5 percent to $780,000 in the
first quarter of 2013 compared with the same period the previous year, a
decrease that the firms consider an aberration caused by a rush of
high-end closings at the end of 2012 in anticipation of changes to tax
laws.
“All these deals that normally would have closed in January, February
and March were pushed forward,” said Hall F. Willkie, president of Brown
Harris Stevens Residential. “As a firm, our closings were three times
what our high had ever been in the month of December,” he added.
Average prices skewed lower as well, down 16 percent to $1,252,081, in
part because last year’s average was inflated by an $88 million closing
at 15 Central Park West. Looking ahead, Mr. Willkie noted, “Our new
deals are considerably above where they were in the first quarter of
last year, which was our record year.”
Overall, there were 3,066 new contracts signed in the first quarter, up
15 percent compared with the first three months of 2012, according to StreetEasy.com.
The Web site’s analysis also showed prices going up 26.8 percent in the
first quarter compared with last year, and a 41.3 percent drop in price
cuts.
Strong demand for new apartments means many new developments are selling
inventory based on floor plans, before the buildings are completed. The
sales center at 56 Leonard Street, a new luxury tower in TriBeCa,
opened in February, and half the building is already sold, with more
than $450 million in signed contracts. The median price of new
development units also jumped 37 percent to $1.3 million in the first
quarter from the same period last year, according to Corcoran.
And with construction costs high, new development is meant to attract
luxury buyers, offering little relief to the rest of the market.
Brokers expect supply to begin to loosen up as prices rise, because
homeowners with little or negative equity who have been holding back may
finally put their homes up for sale as prices appreciate. “People are
looking to move on with their life,” said Diane M. Ramirez, president of
Halstead Property. “I think we’ll see more resale product come on in a
more normal way.” She added, “I’m optimistic the balance will not get
too much worse.”
But buyers who wait could face higher prices as mortgage rates and
prices are expected to rise. “You might have more inventory to look at
next year, but financing costs might be higher and home prices will
certainly be higher than right now,” said Stan Humphries, the chief
economist of Zillow.com.
While all of this means sellers currently have the upper hand, brokers
caution against raising prices too quickly. “We hope that we don’t see
crazy price increases,” said Dottie Herman, the chief executive of
Douglas Elliman. “You want them to rise in a smart way and not just
based on a shortage of inventory,” she continued. “You want them to rise
in a fashion that doesn’t create a bubble.”
source: nytimes.com
