Home sales slow, but bigger & pricier pads sell
Home sales slowed in Manhattan during the fourth quarter of 2010, but aggregate prices increased as consumers bought larger homes, according to fourth-quarter market reports released by the city's major brokerage firms today.
The median price of homes sold in Manhattan in the last three months of 2010 increased between 3 and 11.2 percent from the fourth quarter of 2009, according to market reports from Prudential Douglas Elliman, the Corcoran Group, and sister companies Halstead Property and Brown Harris Stevens (which use the same data to produce their reports).
According to the report by Elliman, the city's largest residential firm, the median Manhattan sales price in the fourth quarter rose 4.3 percent to $845,000, up from $810,000 in the same quarter of 2009, but dropped 7.5 percent from the previous quarter. The average sale price, meanwhile, was $1.482 million, up 14.4 percent from the prior-year quarter.
Appraiser Jonathan Miller, CEO of Miller Samuel and the author of Elliman's report, emphasized that the figures are somewhat deceptive, because the prices of individual homes have not risen.
"Prices are flat across the board," he said, noting that homes are currently selling for roughly 14 percent less than they did during the peak of the market in 2008.
The aggregate price increases, he explained, reflect a greater percentage of sales of larger apartments, while 2009 saw more studio and one-bedroom purchases, due in part to the federal first-time homebuyer tax credit.
"2009 was heavily weighted towards entry-levels sales activity," Miller said. Now that the tax credits have expired, first-time homebuyers are less active, while sales of larger and more expensive apartments have improved. There were 25 apartments above $10 million sold in the fourth quarter, up from 18 in the prior-year quarter, he said.
"Our luxury market has opened up," said Diane Ramirez, president of Halstead.
In the fourth quarter, studios and one-bedrooms comprised 47 percent of the sales, Miller said, down from 58 percent in the same period of 2009. Meanwhile, the average size of an apartment sold in the fourth quarter was 1,401 square feet, up from 1,233 square feet in the prior-year quarter, he said.
Meanwhile, overall sales activity has cooled. According to Elliman's report, there were 2,295 closed sales in the fourth quarter, down 13.8 percent from the third quarter.
It's normal for the market to slow down at the end of the year, Miller said. But sales volume in the fourth quarter was 7.2 percent lower than the same period last year, according to Elliman's report. Halstead and Brown Harris Stevens found that transactions fell 25 percent from a year ago, while Corcoran's report found that the number of sales dropped 17 percent.
The reason for the apparent drop-off was an unusually large amount of activity last year, as the market began to thaw in the wake of the financial crisis.
"The pent-up demand after the Lehman collapse made last year's transaction numbers huge," Ramirez said. "But most of our transactions were under $1.5 million. Now we're selling across the board, but volume isn't as high as it was in the early stage of that pent-up demand."
Miller noted, however, that sales activity and inventory are both within a normal range for Manhattan.
The number of sales in the fourth quarter, 2,295, is not far off from the 10-year-average of 2,323, he said. At 7,232 available homes for sale, inventory in the fourth quarter was roughly on par with the 10-year-average for 7,249. That means things could finally be returning to normal, he said.
"We've gone through this two-year roller-coaster of housing trends because of financing and credit," he said. Now, "we're going out of that. We could see less volality in these markets going forward."
But with unemployment still a concern and interest rates "a wild card," it's possible that home prices could slip somewhat in 2011, he said.
"I see 2011 as -- best case -- moving sideways," he said. "There's a significant probability that we could see modest erosion in prices and sales activity."
A separate report released today by the real estate listings website Streeteasy.com found that the overall average price for a Manhattan apartment was $1.47 million, an increase of 8.8 percent from the previous year, and the total number of closings this quarter was around 2,900, or 20 percent less than 3,600 sales in the prior-year quarter.