After a slight drop in prices at the beginning of the year, the Manhattan real estate market has stabilized in the last three months, with prices rising slightly and sales volume increasing with an expected spring surge in home buying.
Today’s second-quarter sales reports released by the city’s largest brokerage firms show that the increase in the average sale price was largely attributable to more robust sales of larger and more expensive apartments, while studio and one-bedroom sales lagged slightly.
Still, with question marks on employment and the limited availability of credit to homebuyers, there were few predictions of a major upturn in the Manhattan market.
The big sore spot in the market was the median sales price of new developments, which plunged 15.7 percent from last quarter and 19 percent from the year before, to $1.13 million.
Appraisal executive Jonathan Miller said the result was consistent the average sale in a new development being approximately 15 percent smaller in physical size than previous quarters. Because the smaller units require buyers to borrow less and have price points that qualify for special loans, they dominated the market, according to Miller.
Not a strong trend, but buyers are plunking down deposits based only on floor plans in new buildings
When the real estate market was booming, buyers routinely signed contracts for apartments in yet-to-be-built buildings, making their decisions based on little more than an artist’s rendering and a miniature model of their new home.
That changed once the market crashed, the New York Times observes.
Off-site showrooms disappeared, and buyers became deeply skeptical about floor plans and fancy brochures. Developers realized that buyers would no longer buy a home without first running a hand along a kitchen counter and standing by a window to take in the views.
In recent months, though, several new developments around the city have once again sold apartments off floor plans. The practice is not widespread, and the examples tend to be in neighborhoods where there is very little new inventory.
Lucky to be living in stabilized apartments, residents still face rent increases
The Rent Guidelines Board raised the maximum increases on rent-stabilized apartments to 3.75 percent for one-year leases and 7.25 percent for two-year leases. The increases go into effect in October.
A proposed fuel surcharge of 1 percent was not voted on. Last year, the board voted to allow rent increases of 2.25 percent for one-year leases and 4.5 percent for two-year leases.
Appraisers get their just desserts to settle fraud allegation
Two New York-based appraisers accused of mortgage fraud have settled with the U.S. Department of Housing and Urban Development for a total of $100,000 and agreed not to perform appraisals in sales involving Federal Housing Authority-insured loans for a number of years.
The U.S. Attorney’s Office said James Goldberg, founder of JGG Real Estate Appraisal Services, and Robert Micheline, of P&M Appraisals, conspired to inflate the value of 11 New York area homes, so that flip sellers could unload the properties on “inexperienced homebuyers” for profit.
The inflated values allowed mortgage lender Cambridge Home Capital to issue larger loans.
A few developers resort to auctions in two pieces on a specious trend
With few sales, some developers who are tired of seeing loan payments, taxes and maintenance costs consume the bottom line, are resorting to auctions, according to the New York Times.
They are gambling that selling units at a discount now will be better than sitting on unsold property for another year. In some cases they are trying to sell a building’s last remaining units; in others, to prod moribund sales or introduce a property.
Despite a torrent of auctions throughout the country, New York, and Manhattan in particular, has stood as a broker-driven city, where such auctions are rare, adds Real Estate Weekly. But recent activity suggests that there may be a place for such auctions, and perhaps room to grow.
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022