Manhattan Gains Amid Housing Stall 

Aug 25, 2010

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Manhattan Gains Amid Housing Stalls

Despite rising gloom about home sales across the country, sales of apartments in Manhattan appear to have strengthened this summer, with median prices up, inventory down and an increase in the number of apartment closings.

The figures suggest that the Manhattan market, buoyed by a resumption of hiring and a healthy Wall Street bonus season ahead, has so far escaped much of the distress across the country. The National Association of Realtors reported Tuesday that existing home sales nationwide plummeted by 27% in July, following the expiration of federal housing tax credits.

The tax credits, worth as much as $8,000, had much less of an impact in the Manhattan market because the credits made up a much smaller percentage of sale prices than in lower-priced markets. July's median home sale price in Manhattan was $900,000, compared with $182,600 nationwide.

Still, there is some worry among some brokers here that economic uncertainty may stall luxury sales in the fall, as buyers become more reluctant to sign contracts. Some also fear a rush to sell by owners worried about likely increases in capital gains tax rates next year could push down prices.

Dolly Lenz, a top-selling broker at Prudential Douglas Elliman, said that buyers have begun holding back. "There is a lack of confidence and a lack of direction," she said. "You can feel the mood and it is not a good mood. There is no rush to buy and people are gambling that prices are going down."

In other parts of the city, and across the region, sales have more reflected the national trend. Volume fell after a rush of deals in the spring to take advantage of the federal tax credits, according to Jonathan Miller, an appraiser and president of Miller Samuel Inc.

In Manhattan, a review of city records compiled by The Wall Street Journal shows that median prices so far this quarter are up more than 14% above the previous quarter and 16% above the year-earlier quarter, when Manhattan prices hit bottom, during the downturn.

The increase in reported prices was concentrated in co-ops while the condo market was flat. Brokers point out that it often takes longer for co-op sales to go from contract to a closing than condo deals because buyers need to be approved by co-op boards.

Sharon Baum, a Corcoran broker, said that despite the summer heat there has been a lot of activity, including a spate of bidding wars on well-priced property.

A few weeks ago, she said, she put a one-bedroom apartment on Park Avenue South on the market for just under $1 million and had 14 offers within a week. An open house was attended by 136 prospective buyers. It went for 10% over the asking price, she said.

"This is August, when you would think nothing is doing, but when apartments are priced right at all price points they will sell in a week," Ms. Baum said.

Across the country, inventory of unsold apartments has been rising, but in New York, brokers say it has been tightening. Properties that had lingered on the market for many months during the housing downturn are getting sold, and not yet replaced with new inventory. Sales of new condominiums picked up this year, lessening fears about a glut of unsold condominiums driving down prices.

So far this quarter the number of closed sales is running about 5% above the same period last quarter, according to a review of city records.

Brokers say that unlike last year, sellers were not dumping apartments on the market under duress. Back then, some investors suffering huge losses and victims of Ponzi schemes rushed to put apartments on the market, driving prices lower.

A study by the Vanderbilt Appraisal Co. said that at the current sales pace it would take 9.9 months to sell the current Manhattan apartment inventory. A year ago it would have taken 20 months. The study found that the market was in equilibrium for all properties priced $3 million and below, but the absorption rate was considerably slower for the most expensive apartments.

Brokers say some of these trophy listings are lingering because they are priced well above the current market. Several cited Brooke Astor's 14-room apartment, which has been on the market since mid-2008, and remains unsold despite a price cut to $24 million from $46 million.

During the third quarter, there were some significant closings. Carlos Slim, the Mexican billionaire, has topped the list so far, paying $44 million for a townhouse at 1009 Fifth Avenue.

Next was Conan O'Brien's sale of a seven-bedroom duplex high up in the Majestic, a co-op at 115 Central Park West, followed by a downtown townhouse at 2 N. Moore St. with a 47-foot heated lap pool that sold for $24 million. Steve Wynn, the Las Vegas casino developer, paid $23.5 million for a penthouse at the Plaza Hotel.

Some brokers remain concerned about the rest of the year, because of the uncertain economy. Kirk Henckels, the director of Stribling Private Brokerage, said that most of the significant sales recorded this quarter "reflect the market prior to the decline in consumer confidence." He said he was more concerned about the fourth quarter, but said he believed that prices were already near a bottom.

But the fascination with Manhattan real estate hasn't abated. "Selling New York," an HGTV reality-TV show featuring the drama of brokers selling some of Manhattan's most expensive apartments, was renewed for two additional 13-week cycles.

Broker Michele Kleier, president of Gumley Haft Kleier and a principal character on the show, said she remained upbeat on the market, and had already scheduled a series of showings for September.

"I am not hearing from clients that they are losing their jobs," she said. "We are not having the kind of nervousness we had last fall.


Hot Property Book

The stars of HGTV's “Selling New York” let fans step inside the high-profile world of Manhattan real estate in a wild and one-of-a-kind novel of stormy egos, sumptuous homes, and staggering fame and fortune. Written by Michele, Samantha & Sabrina Kleier.