As Manhattan sales drop, prices don’t move much

Hymnal Leaf, Vienna 1742. From Psalterio Antiphonale Romanum De Tempore & Sanctis (flickr photo by WikiMechanics)

When the quarterly results of Manhattan’s housing market are released, you can count on a chorus of brokerage executives to sing from the same hymnal.

Yesterday’s Q4 reports were no exception, and I suppose you can’t really blame presumed experts for painting the statistics in the most vivid colors.

So consistently upbeat is their analysis that I take their comments as more prayerful than perceptive. That’s why I referred to “hymnal” in the first paragraph.

Unlike highly educated — though frequently inaccurate — economists, they seem to base their appraisals of the past and predictions of the future merely on anecdotal evidence, their own feelings, their hopes and, yes, their prayers. Who truly knows what is in the minds of the universe of buyers and sellers?

In other words, your guesses are as good as theirs. And mine.

Of the six published accounts I saw, I thought the reliably skeptical Josh Barbanel’s in the Wall Street Journal ranked at the top.  Said he:

But brokers — who quarter after quarter tend to see the glass as half full — viewed the slippage as aberrational, the result of a rise in economic uncertainty in the second half of last year before the stock market recovered.

At the same time, I can’t fault the other writers for their articles, which were comprehensive, fairly well balanced and linked below:

The numbers were, as always, pretty much in the same direction, though by different amounts.  One report had sales off by 12.4 percent from the same quarter of 2010 (or 19 percent, according to another) and by 35 percent from the previous three months, falling to the lowest level since 2009.

Condo sales tumbled 27 percent from a year earlier and 45 percent from the previous quarter.

As for prices, the median rose to as much as $855,000 (up 1.2 percent) and dropped to as little as $750,000 (down 9.1 percent) from 2010, while the less revealing average price — which was affected last year by a high volume of luxury sales — slid to something between $1.388 million (down 4 percent) and $1.445 million (down 2.5 percent).

Explanations were varied and embraced volatility in the stock market, global economic woes, reduced inventory (especially for condos), consumer confidence, different methods of data collection and timing of closed sales, among other things.  Some said the quarter’s figures represented Manhattan’s journey toward to a normal market, whatever that is.

I was particularly taken with a statement by StreetEasy VP Sofia Song with regard to employment.  “Job security is No. 1,” she told Bloomberg, adding that “people were just paralyzed to enter the market” because of the economy’s volatility.

Given what I’ve written above, you can take my own views with an excess of salt.  But here goes:

Buyers are afraid.  Indeed, they are worried about keeping their jobs and, particularly on Wall Street, receiving “adequate” bonuses.  The state of the nation’s and the world’s economies rattles them.  Those willing to spring know how hard it is to obtain a mortgage.  And no one wants to miss the bottom of the market.

Sellers are afraid, too.  They hope for a big return on their “investment.”  Nor can they contemplate losing the wads of money they poured into renovations.  When they are not desperate to sell, they await better times.  And wait and wait.

Importantly, the disconnect between buyers and sellers persists.  Buyers think — usually with good reason — that sellers are asking too much for their properties and decline to offer what sellers — often in the face of reality — fool themselves into believing is fair value.

It is a stalemate fed by conditions that feel as though they are out of control. 

Consequently, the supply of apartments newly coming to market compares unfavorably with the past, indicating that sales volume will not soon recover.

Regretfully, I am inclined to think that the fabled glass is half empty.  I hope I’m wrong.

Tomorrow: Weekly Roundup

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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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