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3Q - 2009
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Manhattan Market Overview
The number of sales tend to peak in the second quarter of each year. This is reflective of the spring selling season including demand generated from the early year Wall Street bonus season. However, the peak level of activity year to date occurred during the third quarter suggesting the seasonal housing cycle was pushed forward by three months. The unusually low level of sales activity in the first quarter of 2009 appeared to set the stage for a release of pentup demand later in the year. The summer surge in the number of sales was caused by a myriad of factors including mortgage rates at historic lows, the $8,000 first time buyer tax credit, increased affordability after the sharp correction in price levels, and continued evidence that the financial system was continuing to stabilize. In addition, a 24% jump in the Dow Jones Industrial Average over the past 6 months resulted in an improvement in consumer confidence. Still, unemployment remains elevated, employment in the financial services sector continues to decline and unusually restrictive mortgage underwriting remains in place. Therefore, this surge in the number of sales does not appear to indicate a housing market “bottom”, but rather provides some evidence that the housing market has “turned the corner.”
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2Q - 2009
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Manhattan Market Overview
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1Q - 2009
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Manhattan Market Overview
Last fall’s rapid change in market conditions established a new housing market that reflected a lower level of activity and a reset of housing prices. The tipping point which occurred last September was largely triggered by the bankruptcy of Lehman Brothers and federal bailouts of AIG, Fannie Mae and Freddie Mac. This marked a sharp contraction of credit, greatly restricting demand as participants had more difficulty obtaining financing. A national recession, rising unemployment and reduced compensation in the financial services sector also played a role in restricting demand. The market reset caused sellers to be more than a year behind the current market, still setting list prices in relation to the last high mark in their respective buildings. This resulted in the expansion of inventory, listing discount and days on market metrics. However, by the end of the first quarter there was a noticeable up tick in contract activity and attendance at open houses. While this is partially attributable to seasonality, it is also a sign of first time qualified buyers seeking to take advantage of improved affordability.
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4Q - 2008
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Manhattan Market Overview
At the close of the third quarter, there was significant turmoil in the financial markets and unprecedented intervention by federal government agencies. The bailout of Fannie Mae, Freddie Mac and insurance giant AIG, as well as the investor run on the money market Reserve Primary Fund and the bankruptcy of Lehman Brothers, marked a significant change in the Manhattan and US housing market. The contraction of credit continues to play a primary role in the current market.
There was a decline in price levels and the number of sales of re-sale apartments. Due to a surge in new development closing activity in the current quarter and a lull in activity in the prior year quarter, the number of new development closings and price levels rose over the period however these sales reflect the market 12-18 months ago. In contrast to the more modest trends of closed sales, contract activity in the current quarter was marked by a sharp decline in sales activity and price levels. A periodic sampling of sales contracts showed a decline of 35% to 75% compared to the same period last year. Current contract price levels show an average decline of 20% from August 2008.
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3Q - 2008
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Manhattan Market Overview
... The average price per square foot of all new development was $1,320 this quarter, down 1.5% from the prior year quarter. The average price per square foot of a re-sale apartment was up 4.3% to $1,142 per square foot as the bulk of higher end new development has been absorbed while higher end re-sale properties continue to sell... The impact of the credit contraction, associated volatility in the financial markets, as well as unprecedented government bailouts on a federal level have not shown up in the market data for the quarter. The key metrics to consider
going forward are the lower level of sales activity compared to last year¹s record levels and the rise of inventory. The reduction in affordable mortgage products continues to hamper buyers in New York as well as most housing markets
across the country. The upcoming quarter begins with modest inventory levels and the likelihood of a reduction in new development units entering the housing stock next year due to the credit contraction....
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Q2 - 2008
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Manhattan Market Overview
Like the prior quarter,
fewer sales occurred compared to the prior year quarter, but more than the corresponding quarter two years prior. There were 3,081 co-op and condo sales collected at the close of the quarter, down 21.8% from the prior year quarter. The decline in activity was evenly spread across coop and condo property types with the lower level of demand related to tighter credit and a weaker economy. With tighter credit conditions for market participants existing today as compared to last year, it is reasonable to expect a lower level of activity relative to 2007 for the remainder of 2008. In fact, there were more co-op and condo sales in 2007 than in any other year over the past 20 years.
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Q1 - 2008
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Manhattan Market Overview
There were 2,282 sales in the current quarter, down 34.3% from 3,474 sales in same period last year and down 9.4% from the prior quarter total of 2,518 sales. The large decline in the number of sales as compared to the prior year was the result of an unusually high level of sales activity in 2007. Based on activity in the first quarter it is likely that the record number of sales in 2007 will not be repeated in 2008. Sales in the current quarter declined to levels seen two years ago. The reduction of available credit, less favorable mortgage terms, the national economy moving towards a recession and the specter of additional layoffs in the financial services sector over the next two years has begun to restrain the demand for Manhattan residential real estate. Still, the regional economy is performing well, tourism and hotel occupancy rates are at or near record levels and the New York City government is financially well positioned for the next two years.
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Q4 - 2007
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Manhattan Market Overview
Nearly all market indicators in the current quarter showed
improvement over the same period in the prior year. Expectations of a
market slow down was not clearly evidenced by the empirical results of
the quarter. The increase in the number of sales, rising prices,
falling inventory, shorter days on market and a smaller listing
discount showed market improvement over the same period last year. The
market indicators in this report provided evidence of modest overall
gains in measurements such as median sales price and the number of
sales. The robust gains in overall price indicators of average sales
price and average price per square foot were skewed by the sharp price
gains in the luxury market sector so their relevance is limited this
quarter. There remains concern over the adverse impact of the mortgage/
credit problems in the financial markets on both employment levels and
bonus compensation. The financial services industry accounts for
approximately 5% of New York City employment and 23% of wages and
there is a correlation between this leading economic sector and the
residential real estate market. The weakening dollar has created
foreign demand for condominium units, especially in new development,
as buyers take advantage of favorable currency exchange rates.
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Q3 - 2007
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Manhattan Market Overview
...Manhattan remains contrarian, but with reasonable expectations The high level of sales activity, combined with declining inventory levels, listing discounts and marketing times has not resulted in significant price appreciation year to date. This suggests a market psyche containing reasonable expectations of both buyers and sellers. This is a significant departure from the contentious conditions between market participants seen in the past several years, evidenced by patterns of sharply rising prices and declining sales. Buyers were being priced out the market and sellers had been conditioned to a rapidly appreciating market over the prior five years. In addition, Wall Street mortgage and credit market problems that appeared in mid-July and August have yet to show an impact in market data for the current quarter. Existing mortgage underwriting guidelines have become more strictly enforced with fewer exceptions allowed. A lower number of mortgage options and higher qualifying requirements for buyers is expected to temper the flow of sales activity...
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2Q - 2007
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Manhattan Market Overview
The number of Manhattan apartment sales are at record levels. Listing inventory has fallen sharply from recent highs. Two of three price indicators tracked in this study set records. Days on market and listing discount indicators are contracting. In contrast, national housing statistics, while not reflective of individual markets, show just the opposite. The New York City economy continues to show improvement coming after two consecutive years of record Wall Street bonus payouts. Preliminary indicators from the financial services sector show more of the same strength bonus income in the coming year. Mortgage rates are low despite recent increases. The government is running a budget surplus, unemployment is low and the weak dollar has brought in significant foreign investment. The constant in the demand/supply equation has been new development activity, whose pace has not abated for the past three years. It contributed to the rise in inventory levels of 2005 and 2006, but the significant demand has more than offset new product added to the market in 2007. The relatively inelastic short term response to demand suggests that the high level of demand is something to focus on for the remainder of the year and through 2008.
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1Q - 2007
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More sales activity as inventory drops and prices rise
More sales activity as inventory drops and prices rise. Price indicators showed modest gains. The average price per square foot and median sale price posted gains over the prior year quarter.
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4Q - 2006
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Prices up from prior year, market in position for gains
...Buyers begin to stir as sellers price prop-erties closer to market levels For the past year and a half, the Manhattan market had been characterized by a surplus of listing inventory, with a large portion of it comprised of overpriced resale properties. An abundance of new development inventory has been the focal point of the excess inventory problem. A rift between buyers and sellers emerged as buyers became more demanding about price discounts, resulting in a lower level of sales activity and expanded days on market. Many would-be purchasers moved into the rental market, not because they could not afford to purchase but because there was concern over the near term outlook of the real estate market. However, listing inventory stabilized in the third quarter and dropped sharply in the current quarter as the expiration of over priced resale listings overtook the rise in new development inventory. Record Wall Street bonuses have provided more disposable income and helped keep unemployment levels low. This has helped fuel demand for housing, the effect compounded by four consecutive years of gains because bonus recipients may or may not purchase in the same year their bonus was awarded. Election changes in the federal government last November, more realistic pricing by sellers, a drop in inventory levels as overpriced listings expired, low local unemployment, solid fiscal condition of city government, weakening US dollar, stabilizing mortgage rates and lack of a price correction in six quarters in the post housing boom era have all helped influence buyers to reconsider their position and begin to enter the purchase market again...
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1997 - 2006
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Manhattan Market Report - A 10-Year study of Co-op and Condo Sales
All Manhattan price indicators set records this year over the records set in the prior year. The average sales price this year was a record $1,295,445, up 6.1% from the prior year record average sales price of $1,221,265. Although the price indicators set records over the past two years, the pace of price growth has slowed considerably. The 6.1% increase in average sales price was well below the 21.6% appreciation rate seen in the prior year as well as the 18.1% appreciation rate that occurred in the year before that. The lowest annual appreciation rate of the past decade occurred in 2002 where the effects of 9/11 brought the appreciation rate down to 2.1% from 9.5% and 37.2% in the prior two years respectively.
At the end of 2006, there were 5,934 units listed for sale, down 0.5% from the prior year total of 5,964 units. The first half of the year, however was characterized by sharply increasing inventory levels, peaking in the second quarter at 7,640 units. Inventory leveled off in the third quarter and dropped back to levels seen at the end of 2005.
For the second straight year the days on market and listing indicators expanded. The increases this year as compared to the prior year were larger, returning to levels that existed before the housing boom began in the early part of this decade.
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3Q - 2006
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Prices fall below prior quarter record but remain above prior year quarter
Prices are off in the current quarter from record levels set in the prior quarter but remain above levels seen in the prior year quarter. Factors such as stable local economic conditions, including an optimistic Wall Street bonus outlook, reasonable employment and payroll levels, fiscal austerity by local government and currency exchange rates encouraging foreign investment added to the stability of the market. Nevertheless, these conditions have not convinced would-be buyers to make a purchase decision as evidenced by weaker sales and increased rental activity.
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2Q 2006
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Manhattan Market Overview
The phenomenon of rising prices and declining sales is a classic sign of a market in transition. The market has entered a period where the sellers no longer have a clear advantage in the typical sales transaction. Buyers were expecting a deep discount on all transactions while sellers remained fairly firm in their pricing.
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1996-2005
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Manhattan Market Report
The Manhattan market saw record prices in all major price categories: Average sales price, average price per square foot and median sales price. All categories saw year-over-year gains in excess of 20%
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1994-2003
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Manhattan Townhouse Report
Over 1,000 residential townhouse transactions were analyzed over this ten year period. 1, 2 and 3-5 (delivered vacant) family houses comprised the data set.
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Market reports prepared for Prudential Douglas Elliman by Miller Samuel Inc.
Jonathan Miller
President & CEO
Miller Samuel
Real Estate Appraisers & Consultants
About Jonathan
http://www.millersamuel.com
Some reports are PDF files. Adobe Acrobat required.
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