12/03/08

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Prices up; sales now up, too

The bloom isn't off the rose or, at least, the Apple. Recently released numbers show sales in the Manhattan residential market continuing at a strong pace. As a bonus, while there isn't a housing boom these days, prices have been heading up modestly since the beginning of the year after dropping a bit at the end of 2006.

According to a second-quarter report by appraisal firm Miller Samuel, the number of Manhattan sales was up more than 103 percent from the second quarter of last year to the second quarter of this year, jumping from 1,934 to 3,939 transactions. There was also a 13.4 percent increase in sales over the first quarter.

In terms of prices, they are still slightly below what they were last summer. Only a year ago, sellers were asking high numbers like it was still the middle of the boom, and few buyers were biting. The price declines haven't been on the level of those seen in the national market, however.

The average price of a Manhattan apartment in the second quarter of this year was $1.33 million, down 3.8 percent from the same time in 2006.

But prices have been rising since the beginning of this year. In the last six months, the average price of a Manhattan apartment has jumped more than 8 percent. The average price per square foot has fared even better, rising more than 13 percent since the start of the year (see chart).

According to Jonathan Miller, president of Miller Samuel, the gains would be more but for the large amount of new development condos on the market, which are keeping prices in check. New development sales constitute approximately 20 to 25 percent of all apartment sales today.

"If new development was not as much of a factor, I think we might re-enter a housing boom in New York City," Miller said. "But because it is such a dominant factor, I don't see that happening. It's simply a solid market."

In the second quarter, there were 5,237 apartments for sale on the market, a 31.5 percent drop from the previous-year quarter and down 11.6 percent from the first quarter, Miller Samuel reported. Co-op inventory is particularly tight.

With old inventory cleared out in the first half of the year, new inventory will enter the market at higher prices, said Kirk Henckels, director of Stribling Private Brokerage.

"Following the pattern of the last few years, there will be a relatively quiet end of the summer and a strong September building through the end of the year, when bonuses start kicking in again," Henckels said. "The trend will continue as long as we have the inventory."

Other brokers are similarly optimistic, citing macroeconomic trends.

"There is no reason to feel that [the market] isn't going to continue the way it has in the first half," said Ruth McCoy, executive vice president at Brown Harris Stevens, noting strong job growth and still-relatively low interest rates.

"The number of units that closed in the second quarter was huge, which means more of the units on the market have sold and closed," McCoy said. "But there are definitely people out there buying, and we see nothing quieting down."

In some sectors of the market -- particularly large apartments -- price growth has been especially notable, though as always it's sometimes difficult to tell if the averages have been skewed by a few large sales.

The average sales price of a four-bedroom co-op apartment in the second quarter was up 17 percent from the first quarter, to $9.9 million, according to Miller Samuel.

That's an increase of more than 41 percent from a year ago.

In the condo market, the biggest price increases have been for three-bedrooms -- average prices in the second quarter were up more than 23 percent from last year and 19 percent from the first quarter, to $4.6 million, Miller Samuel reported.

Miller said to expect moderate price increases during the rest of the year and a healthy number of transactions, despite the fact that the second half of the year usually sees a smaller number of sales than the first half.

"In the next six months, there will be much more sales than normal but less than in the first half of the year, and at somewhat higher prices," he said.