What to make of a Times story on stalling sales?

An article in the New York Times today does little to inspire confidence in the Big Apple’s housing market.  In case you missed it, the long piece by Vivian Toy begins this way:

This year, the burst of real estate action that marks the spring season came early in New York. Manhattan saw a big sales spike in March, well before the market’s usual busy season in May and June. But now, instead of going into the expected overdrive, some brokers say, sales have started to stall.

That could simply mean that spring arrived and ended early, as buyers gained confidence in the market and began to shop. Or it could mark the beginning of a slide that will lead to another dip in prices and sales activity.

Although many brokers will tell clients that the market has already hit bottom, some economists and real estate experts predict that prices are still falling, and will drop 5 percent to 15 percent by the end of next year.

Frankly, I’m not sure what to make of the article, which is strong on anecdote, weak on numbers. That’s not to say that the anecdotes don’t provide a valuable perspective, including my own sliver of experience in the spring market.

Writer Toy reports that the number of signed contracts for apartments in Manhattan jumped nearly 35 percent from February to March, to a total of 1,000 contracts, far more than had been typical in the previous two years, according to data provided by Streeteasy.com. In April, she continues, there was an increase, to 1,063 contracts, but the number slipped slightly in May, to 1,016.

According to the Real Estate Board of New York (REBNY), there were 3,849 apartment sales in the still booming first quarter of 2008 in Manhattan. One year, later the number plunged 62 percent, to 1,470 for the same three-month period. This year, sales were 52 percent higher than the first quarter of 2009.

So, yes, there was a surge, and it brought sales up to 2,234, possibly worth two out of three cheers.

By REBNY’s calculations, the median price of an apartment in Manhattan slipped to $789,000 from $825,000 a year earlier and $865,000 two years earlier, in 2008.

Bear with me, there is one more set of statistics that need to be examined.  These are from OLR.com, the database common to most brokers.  Over the last four weeks, there have been 692 closed sales of Manhattan apartments, townhouses and multi-family dwellings.  Altogether, 1,049 properties went under contract.  (I cannot retrieve data for the same period a year ago.)

See the table below for more details:

All Manhattan Single Family Multi Family
Average Listed Price $1,273,491 $7,293,312 $3,405,941
Median Listed Price $878,750 $5,900,000 $3,000,000
Number of Properties Sold 692 18 12
Listings Taken Off Market 786 34 31
New Listings 1317 15 15
Contracts Signed 1049 4 12
Listing Inventory 10207 862 1046
Average Price per SF $1,034 $1,400 $720
Listings with Price Drops 1133 15 26

Unfortunately, comparing the REBNY and the OLR numbers is like comparing radishes and rutabagas.  If you’re like me, you’ll take all housing statistics with a grain of salt. The big brokerages, Streeteasy.Com, PropertyShark.com and others, including Case-Shiller, have their own criteria. No two reports will be the same.

But I suppose that changes within any report are worth considering, though still with more than a soupçon of skepticism.

All right, I’ve been sucking my thumb long enough in this post–as journalists call such writing–and I have to say that I have a feeling that the Times piece is pretty much on target.  What the numbers seem to suggest is that there is no actual surge of sales or prices.

Although I have active buyers with whom I’m working, one or two have migrated to the sidelines.  But I don’t think it’s about waiting for the bottom of the market so much as personal matters such as a hard look at affordability.

In my opinion, the source of any market fragility and consumer indecision is twofold: Sellers have not listed precisely the properties that my buyers are seeking and any that my buyers have chosen face intense competition.

I infer from extensive reading and experience that: Some of the best properties remain off the market as sellers wait to receive more than bottom dollar; many listed apartments and townhouses are languishing  because they are priced too high; and those properties that are well priced continue to enjoy more than one bidder, usually fetching prices above ask.

(Not 20 minutes ago, I ran into a broker who told me about an Upper West Side three-bedroom apartment with 2,000 square feet that was attractively priced at $1.6 million.  An enviable 15 parties visited the unit in the low 90s off Amsterdam Avenue during the first open house last weekend.  There already is an accepted offer on the place.)

In other words, the market may have slowed somewhat, only somewhat.  But the most interesting unanswered and unknowable question is not whether, but why.  Merely seasonal variation?  The small effects of the tax credit?  Without extensive market research, we may never know for sure.

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Malcolm Carter
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022

M: 347-886-0248
F: 347-438-3201

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