How’s the market?
That a question I am asked daily. I wish I had a better answer than this: It’s more or less stable, depending on the week.
Although my response seems to satisfy most questioners, it troubles me to be unable to provide a more precise take on the Manhattan housing market. Appraisal executive Jonathan Miller has been saying for some time that the market has been “moving sideways,” and I guess that’s essentially the same thing phrased more elegantly than I do.
There are plenty of statistics, the best coming from my friend Noah Rosenblatt over at UrbanDigs.com. He and others have documented a surge in the sales of high-priced properties, those in the millions.
But the numbers also show that supply is extraordinarily tight. The quality and quantity of inventory has dampened sales at the more modest levels — especially so for properties that have general appeal, are not overpriced and don’t suffer from staleness.
We’re way behind a year ago. According to Noah, the number of new contracts signed in April was 12.5 percent below one year earlier, a pallid 1,006. In an expensive market like Manhattan, last year’s homebuyer tax credit could not have boosted sales all that much.
So far this month, the number of signed contracts has been trending down. My admittedly anecdotal impression from the reports of other brokers and what I have been seeing at open houses is consistent with the statistics.
Nor do condo and co-op prices seem to be holding up very well. According to Streeteasy.com, the median price during the first quarter dropped 7.89 percent from the last three months of 2010 and 0.6 percent from one year earlier. The median price was $770,000 in the 2011 first quarter.
Condo prices were much stronger than co-ops. (I’m avoiding average prices because the vigor of the luxury market skews the results.)
The OLR database, which contains virtually all of Manhattan’s listings, has the median for the four-week period ended Friday at $846,750 and exactly the same for the previous four weeks. (Don’t expect any two sets of statistics to match.) It also indicates approximately 3 percent fewer price reductions between the first and second of the two periods. Should the median stay close to that sum, perhaps my response to the question all of us in real estate keep getting asked will prove to be correct.
If what I am reading and seeing generally is on target, our housing market may, in fact, be stable. In light of the sick state of housing in the rest of the country, I suppose that is good news.
But to my mind, “stable” also is merely faint praise.
Moreover, my impression is that the market has just turned suddenly somnolent in relative terms. As I write this post over the Mother’s Day weekend with less than a month left in our typically best selling season, I have to say that I am not encouraged by the looming stillness of summer. Last summer, activity plunged to a deep valley, so why should we expect anything better this time around?
However, with Wall Street having regained strength — maybe even for a reasonably long term despite the shenanigans in Washington, global issues and weakness in the jobs sector — I’m inclined to speculate that our market will muddle forward in fits and starts for the remainder of the year without spectacular activity, particularly praiseworthy price gains or losses, or bubbles more noticeable than those in a glass of champagne.
What surprises me, and shouldn’t, is that buyers seems to be more tentative than is rational in the light of such almost incomprehensibly low interest rates for mortgages. With the mortgage interest deduction still very much alive, everything has lined up for prospective purchasers to snare a bargain at any price, even if the price eventually drifts down before recovering again.
They would be well advised to consider the total of their monthly costs, the value of having lived in a new place before they perceive the bottom and perhaps the benefit of moving from one asset class to another that has historically produced safe long-term returns. Buying now would provide the certainty of having found a new home as opposed to the uncertainty of waiting. . . waiting. . . waiting.
In the event that Manhattan property prices erode in the coming months, it is hard to imagine that any decline will be precipitous. And it is hard to understand what either sellers or buyers are waiting for.
What signs of light or darkness do they imagine will be discernible on the one hand and of certain financial benefit on the other?
They are unjustifiably trying to time the market, and everyone knows — or ought to know — how well taking that approach works.
Is it the right time to buy or sell? The answer to that question is easy: When can you count on it being a better time and how long are you willing to wait?
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022