Manhattan Enjoys Slight Residential Sales Uptick in Q1; Continues to Outperform U.S. Housing Market

---

According to New York-based Prudential Douglas Elliman's quarterly Manhattan Market Report, the first quarter of 2011 posted slight sales gains while prices continued to slide 9.9% over the same period last year.

Co-Op and Condo Market

There were more sales in the first quarter of 2011 than in any first quarter in 3 years or since the credit crunch in 2008. There were 2,394 sales in the quarter, 0.4% more than 2,384 in the same period a year ago and 4.3% more than 2,295 in the prior quarter. The pending sales index--an aggregate of collected contract data presented in index form--indicated a 10.1% increase from the prior quarter, but activity was 14.2% lower than the same period a year ago. Market share for new development sales slipped to 14.5% of all sales down from 16.6% during the same period a year ago. The primary price indicators declined over the past year reflecting the impact of the federal homebuyer's tax credit. The first half of 2010 saw an increase in sales activity pressing prices higher as buyers sought to sign contracts by April 30th in 2010. This "poached" some demand from the sales activity normally seen over the summer and fall and drove prices higher. Once the stimulus was removed, the second half of the year saw weaker overall conditions in comparison. Median sales price for the first quarter was $782,071, down 9.9% from the same period last year. Price per square foot averaged $1,025 in the first quarter, slipping 1.3% over the same period. The amount of active listing inventory is at its lowest level for a first quarter since 2007. There were 7,605 listings in the first quarter of 2011, 5.3% below the 8,027 listings in the same period last year. The combination of declining inventory and modest gains in sales activity affected the monthly absorption rate--the number of months to sell all active listing inventory at the current pace of sales--which fell to 9.5 months from 10.1 months in the same period last year. The current rate is slightly faster than the 9.9 average absorption rate of the past 10 years or 40 quarters. Mortgage lending remains unusually tight and unemployment, while generally improving, remains elevated. Both factors have kept sales activity from posting significant gains. Although Wall Street bonuses declined, overall compensation actually increased 5%. This resulted in an increased visibility at the high end of the housing market. The performance of this regional economic engine is a key reason that the Manhattan housing market continues to outperform the US housing market.



Co-Op Market

All price indicators in the first quarter were below the levels seen in the same period last year. The price per square foot of a Manhattan co-op sale was $896, 1.3% less than $908 in the prior year quarter. The decline in the price indicators was partially attributable to the decline in market share of high-end co-op apartment sales. The 3 or more bedroom co-op market comprised 10% of all co-op sales in the first quarter, down from 13% in the prior year quarter and down from 14% in the prior quarter. In addition to the shift in the mix to 2-bedrooms and studios, the 3-bedroom market was the only segment to post double digit year over year declines in median sales price. The number of sales increased 28.7% over the year to 1,430, the largest quarterly total in more than 3 years, outpacing the 5% year over   year gain in listing inventory. As a result, the monthly absorption rate fell sharply to 8.4 months from 10.3 months last year at this time. A lower absorption rate suggests that the market has been improving its efficiency with the increase in purchase activity outpacing the increase in listings coming on the market.
 


Condo Market

All price indicators increased in the first quarter when compared to the same period last year. The median sales price of a Manhattan condo was $1,150,000, 8% higher than $1,065,000 in the prior year quarter. The increase was largely due to a jump in market share of 2-bedroom apartments in the first quarter to 44% of all condo sales from 34% in the same period last year, the highest market share in two years. There were 2.1% to 14.2% price increases across all size categories with the exception of the most volatile category of 4+ bedrooms, which fell 17.7% over the same period. Days on market took 5 days longer in the first quarter of 2010, averaging 140 days from 135 days in the prior year quarter. The constraint on inventory allowed older sales to be absorbed pushing the average days on market higher for properties that closed in the quarter. Listing inventory in the first quarter fell 14.5% to 3,607 units from the prior year quarter, the second lowest level of active inventory in more than five years.


 
Loft Market



Luxury Market


 

In Focus

In any market, weak or active, there are usually properties that sell for more than asking price at the time of the contract. During the third quarter of 2008, just prior to the onset of the credit crunch at the end of that quarter, 15.5% of all properties sold "above list", 36.1% sold "equal to list" and 48.3% sold "below list". In the second quarter of 2009, one of the weakest points in the post-Lehman housing market, 2.7% of sales were "above list". In the most recent quarter, 6.8% of all sales exceeded list price compared to 7.6% equal to list price and 85.6% below list price. The original list price impacts the marketing time of the property, regardless of what price changes subsequently occur. In the first quarter of 2011, the average days on market for a property that was originally priced at market value sold 43 days faster than if priced above market value. Overpricing a property has long proved to be counterproductive for the seller. While days on market from the last date the price was changed, if ever, to contract date has remained relatively stable over the past year, the days on market from the original list date to contract date declined 50 days.

---