LUXURY SALES COLOR THE HOUSING MARKET, WHICH IS MOVING ‘SIDEWAYS’ AND PROMPTING CAUTIOUSLY OPTIMISTIC FORECASTS
Sales activity in the second half–as measured by number of sales, median sale prices, average number of days on market and the number of Manhattan apartments on the market–settled comfortably into historic 10-year ranges, according to two separate market reports in Crain’s New York.
Despite a busy market for trophy properties, the pace of sales and median prices of Manhattan apartments slipped during the fourth quarter, the Wall Street Journal observed.
The number of sales fell by 13.8 percent in the fourth quarter compared with the previous quarter and 7.2 percent compared with the year-earlier quarter, according to a report prepared by appraisal firm Miller Samuel for Prudential Douglas Elliman.
The median sale price of $845,000 in the fourth quarter was off by 7.5 percent from the previous quarter and up 4.3 percent from a year earlier, the report found.
Jonathan Miller, who recorded a podcast expounding on his analysis, noted on his blog that the decline in sales from the third to fourth quarter exceeded the 20-year 7.5 percent average drop while inventory rose 5.6 percent in that period.
And a decrease in inventory of 11 percent below the prior quarter was greater than the average of 3.4 percent over the past decade.
In the fourth quarter, studios and one-bedrooms accounted for 47 percent of the sales, Miller said, down from 58 percent in the same period of 2009. The average size of an apartment sold was 1,401 square feet, up from 1,233 square feet in the prior-year quarter, he was quoted as saying in the Real Deal.
Brokers say that the pace of new deals has been picking up lately at all price points. But even so, some brokers predicted that prices will stagnate at best through much of the new year.
LUXURY APARTMENT SALES CLOSE 2010 ON HIGH NOTE
The Manhattan luxury residential market ended 2010 with far more vigor than one year earlier, notes Crain’s New York.
Nine apartments asking more than $4 million went into contract Christmas week, according to brokerage Olshan Realty. The firm tracks the high-end residential market and began releasing its data to the public last month.
By comparison, during last year’s Christmas week, no apartments more than $4 million went into contract, according to Olshan Realty’s records. Among the luxury pads that went into contract during the week of Dec. 20 were a seven-room, 3,500-sf duplex penthouse at 200 Eleventh Ave., which was asking $17.5 million, and a seven-room, 2,900-sf condo at 15 E. 63rd St. for $10.5 million.
“Contracts being signed for properties over $5 million have outpaced the number of listings that either closed or fell out of contract,” said Noah Rosenblatt, founder of UrbanDigs. “There is demand for $5 million properties.”
STILL, FALLING COST OF RENTING LUXURY UNITS SPURS MANY RESIDENTS TO AVOID BUYING THEM
More people are leasing the most expensive Manhattan apartments as rents fall and sale prices climb from last year’s post-financial crisis lows.
New leases signed for units with monthly rents above $15,000, the top 1 percent of the market, more than doubled to 77 in the third quarter from a year earlier, according to appraiser Miller Samuel Inc.
The median monthly rent for all luxury units in Manhattan, defined as the top 10 percent of the market by price, declined 18 percent to $6,950 in the third quarter from a year earlier. The median luxury sale price rose 13 percent to $4.39 million after bottoming out at $3.78 million in the final three months of 2009, observes Bloomberg.com.
The divergent moves left the gap between the cost of buying a luxury apartment and the annual cost of renting at its widest since the first quarter of 2009, when the median purchase price peaked at $6.6 million. Buying cost 53 times renting in the third quarter, compared with 38 times a year earlier and 58 times in March 2009.
OVERALL, THOUGH, THE RENTAL MARKET TIGHTENED IN DECEMBER
Bucking seasonal trends, inventories dropped 4.52 percent. Non-doorman units fell 5.86 percent and doorman units, 3.51 percent, representing the most significant fluctuation in vacancies since June.
At the same time, prices continued to increase around Manhattan.
Rents went up 1.38 percent from November, the largest change being in bigger units. Non-doorman two-bedroom units rose 3.73 percent and doorman two-bedroom units, 2.58 percent. Additionally, prices continued to experience year-over-year growth–6.29 percent over December 2009.
THE TIMES PONDERS THE CORRECT DEFINITION OF ‘PENTHOUSE’
The word “penthouse” evokes images of lone perches atop of Fifth Avenue towers with incomparable park views.
But the word has been stretched to its limit and beyond in the New York real estate lexicon, with some apartments being called penthouses for dubious reasons, says the Times.
FAT WINS OUT WHEN IT COMES TO TOWNHOUSES ON THE MARKET
Narrower houses are rapidly losing market share to those that are wider than 19 feet, New York magazine informs its readers.
Townhouses that are just a little wider—seventeen to nineteen feet—dipped from 37.4 percent of sales in 2005 to 33.8 percent in 2010
Five years ago, houses sixteen feet wide or less accounted for 25.9 percent of townhouse sales; in 2010 (as of Dec. 15), they constituted just 16.2 percent.
Townhouses that are just a little wide–seventeen to nineteen feet–dipped from 37.4 percent of sales in 2005 to 33.8 percent in 2010. The average square footage of houses sold in Manhattan has been rising every year since 2007.
EAT YOUR HEART OUT, ELOISE: SUPER ENJOYS LUXURY LIVING IN HIS ONE-BEDROOM CONDO ON A HIGH FLOOR OF THE PLAZA
Many working New Yorkers dream of living in a hugely expensive condo high up in the Plaza Hotel, down a corridor where Eloise may have once roamed.
But Edwin Pinzon, the superintendent at the Plaza, gets to live that dream every day. As one of the perks of his job, he makes his home in a large one-bedroom apartment on the 13th floor.
When much of the Fifth Avenue hotel was converted to a condominium in 2007, the condominium buyers were obligated to provide funds to purchase the superintendant’s apartment.
Now, property records show that the Plaza condo board has completed the purchase, paying $3.1 million for the unit.
That price that may be the most expensive superintendent’s apartment ever purchased by a co-op or condo board, brokers said.
CONVENIENCE AND COST SAVING OF A WASHER/DRYER TRUMPS MANY OTHER APARTMENT FEATURES
Apartments that have washers and dryers make up only about 20 percent of the sales and rental listings in Manhattan, according to StreetEasy, but demand is increasing.
Condominium developers are making these appliances part of the standard package, and older buildings–even pre-wars–are relaxing longtime bans to keep residents happy and to avoid scaring off buyers.
Still, newer buildings have the edge. A search of StreetEasy’s listings in late December showed that 593 Manhattan co-ops for sale offered washers, versus 1,849 condos.
WHILE NOT EXPECTED TO BE AWESOMELY HEALTHY, OUR HOUSING MARKET DOES NOT LOOK DESPERATELY SICK THIS YEAR
Possible price erosion. No more government stimulus propping up the market. But all with the saving grace of more stability.
Those were some of the developments that the Real Deal forecast prior to the latest market reports that New Yorkers can look forward to this year.
Indeed, the good news is that the predictions for the New York City market aren’t dire for the coming year, the publication said. The bad news is that they aren’t that awe-inspiring either, it continued.
Many of the market analysts and CEOs of brokerages interviewed by the Real Deal said there is unlikely to be robust activity this year (largely because of strict requirements from mortgage lenders and the pending concerns about the unemployment picture).
But they also opined that buyers and sellers have become more comfortable than they were last year at this time. That will help draw more people into the market.
WHERE AN APARTMENT IS PLACED IN A BUILDING CAN DETERMINE YOUR QUALITY OF LIFE
Living on a top floor can expose you to water damage. A unit next to an elevator shaft or compactor shaft may mean noise. And being on the path to a community room or playroom–well, you know how that can annoy you.
BrickUnderground asked RAND Engineering & Architecture’s Peter Varsalona for the lowdown on which spots inside a building present the most risk to health, home, pocketbook and/or peace of mind.
He came up with the seven worst places to live in a building.
UH OH, NOW FORECLOSURES IN THE REGION THREATEN THE HOUSING MARKET
Standard & Poor’s Ratings Services says that it’s taking longer for the U.S. housing market to absorb foreclosed homes, meaning there may be a major drag on prices for a few more years.
It will take nearly 10 years to clear the shadow inventory in the New York metropolitan area at the current liquidation rate, S&P estimates That’s at least twice as long as it will take in any of the other top 20 metropolitan statistical areas monitored by S&P and nearly three times the average time to clear for the entire U.S.
BUT FORECLOSURE ACTIVITY PLUNGES IN THE NEW YORK CITY ALONE
New York City foreclosure activity in the fourth quarter saw a precipitous drop following lawsuits that exposed shoddy paperwork from banks, new figures from PropertyShark show.
Scheduled foreclosures dropped 26 percent compared with the third quarter and stood 32 percent below 2009 fourth quarter levels. Queens retains the largest portion of the city’s scheduled foreclosures, at 49 percent of the total. Manhattan has just 6 percent while Brooklyn clocks in at 19 percent.
NEW YORK ARCHITECT DETAILS RENOVATION COSTS OF VARIOUS PROJECTS
“I always know that I am dealing with a renovation rookie when immediately after briefly describing their project they want to know the cost,” architect David Katz writes in a BrickUnderground.com column.
“As a basic ballpark, the minimum cost of a respectable New York City renovation is about $250 per square foot, but unless you are doing a gut renovation, the cost cannot be accurately predicted this way. And even then, the cost of renovation work varies dramatically based on a seemingly infinite number of variables.
“While the size of the area of work is an important consideration, it is far from the only thing that affects the price.”
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022
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