Buying in Manhattan? Apartment Prices Steady

Published: October 4, 20066

NY Times

If you have been waiting to buy a Manhattan apartment until after prices come tumbling down, you may have to wait a little longer.

Manhattan co-op and condominium prices sagged a bit last quarter, in the usually slow summer selling season, but by most measures they remained healthily above prices reported a year ago, according to a number of competing market reports released yesterday.

The conclusion of many of the brokerage firms releasing reports was that after a large advance in prices over the last few years, followed by several quarters of uncertainty, the market was essentially stable during the last quarter, despite the fact that apartments from a wave of new construction are coming on the market and there was continuing uncertainty about the direction of interest rates and the economy.

“We’ve been on the freeway for four years at 90 miles an hour, and now we are at a regular pace of 60,” said Michael Martin, the director of research at Mitchell, Maxwell & Jackson, an appraisal firm, which released one of five reports made available yesterday, and collaborated with the Corcoran Group on a second report, with slightly different numbers. “We are back to a fairly regular pace of sales activity.”

The various reports’ figures for the average decline in price of a Manhattan apartment ranged from 1 percent to 10 percent from the previous quarter, with larger price declines in the sales of older co-ops being offset by increases in the average price of condominiums, including the sales of many new apartments that often sell at a premium.

Average prices declined on the West Side of Manhattan by up to 17 percent during the quarter, offset in part by rising prices on the East Side, according to several of the studies.

Prudential Douglas Elliman, whose study reported the highest quarterly sales prices, put the average sale price at $1.3 million, down 7 percent from the prior quarter, and 12 percent above the $1.15 million average sales reported a year ago. Another brokerage firm, Brown Harris Stevens, put the average price at $1.1 million, 10 percent below the previous quarter and 4 percent below figures it recorded a year ago.

Offsetting the quarterly decline were other figures suggesting the market was essentially stable. The number of sales recorded during the quarter rose, and the number of listings of apartments at Manhattan brokerage firms was flat, after rising 32 percent during the previous year, according to the Elliman study. The average number of days an apartment was on the market increased slightly, from 144 to 150. Rising inventory can indicate a weakening market.

Although hundreds of apartment sales are recorded by the city each week throughout the summer, an increase in activity was reported in recent weeks. Jonathan J. Miller, president of Miller Samuel Inc., an appraisal firm that prepared a market study for Prudential Douglas Elliman, said that many buyers were “sitting on the fence” and unable to make a decision. At the same time, he said, sellers had not significantly dropped prices.

“Nobody is making a decision,” he said. “At some point someone has to blink.”

Mr. Miller said that in the last few years, prices have declined and sales have slowed in the third quarter, only to regain momentum, as buyers, stirred by bonuses on Wall Street, rushed in to buy expensive apartments.

Part of the uncertainty over the direction of the Manhattan market comes from the many ambiguous and contradictory market reports issued by various brokerage firms. They all combine publicly available data on co-op and condo sales, with proprietary information on closed sales that have not yet been filed and recorded. The result is that each report includes a different mix of sales, and may record the same sales in different quarters as information becomes available.

Sometimes the information available is incomplete. Mr. Miller, for example, said the increase in reported sales might be the result in part of better data collection, as the city provided public access to sale prices of co-ops that had not previously been available.

Pamela Liebman, the chief executive of the Corcoran Group, noted that while the overall market paused in the last few quarters, the prices on smaller apartments had continued to rise, driving up median prices, a measure less influenced by multimillion-dollar sales, making even small apartments more expensive. As a result, some developers of new apartments have been offering concessions, such as covering closing costs, that would reduce the cash outlay needed to buy an apartment.

Gregory J. Heym, chief economist for Brown Harris Stevens, who produced the most seemingly pessimistic figures, said the price decline actually captured a market shift. He said the decline in average sales prices reflected a change in the typical apartments sold: the average apartment size dropped and the price per square foot rose.

He said he expected the strong local economy, and modest interest rates, to keep the co-op and condominium markets stable.


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