Manhattan apartment prices fall, will drop further

Discussion in 'Wall St. News' started by S2007S, Jan 6, 2009.

  1. S2007S


    Manhattan apartment prices fall, will drop further
    Tue Jan 6, 2009 2:36pm GMT

    By Helen Chernikoff

    NEW YORK (Reuters) - Prices of existing Manhattan apartments fell nearly 4 percent in the fourth quarter, two reports showed, and analysts warned of much deeper declines in coming months in the wake of turmoil on Wall Street and financial sector layoffs.

    The median sales price -- in which half the sales prices were higher and half were lower -- of an existing Manhattan apartment fell 3.6 percent to $732,500, according to the Prudential Douglas Elliman Manhattan Fourth Quarter Market Overview.

    "You could say it started the second week of September when Lehman (Brothers) filed for bankruptcy," said Dottie Herman, chief executive of Prudential Douglas Elliman, one of the United States' largest real estate companies.

    "Up until then, New York City was holding its own and after that people were in shock. Things they trusted their whole lives just fell apart."

    Herman sees a possible price decline of 20 percent to 25 percent afflicting the entire Manhattan market in the first quarter.

    According to the Corcoran/PropertyShark report, median existing sales prices fell 4 percent year over year to $759,000 in the fourth quarter.

    Prices of existing homes, also called resale prices, fell in only one other quarter in the past five years, by 1.1 percent in the fourth quarter of 2006, and that was something of a blip, said appraiser Jonathan Miller, author of the Prudential report.

    These numbers, on the other hand, are a leading indicator of more declines to come, because resale prices are not susceptible to distortion like sales figures for new construction, in which contracts are signed up to 18 months before the sale is completed.

    The lag time between the signing and closing of a resale contract is much shorter, Miller said.

    In this quarter, for example, the median sales price of new housing in Manhattan rose 33 percent to $1.54 million, but that number is not necessarily indicative of the current market because many of those contracts were signed months or even years ago, according to the Corcoran/PropertyShark report.

    Such sales distorted this quarter's figures altogether, Miller said, resulting in an overall rise in median sales prices of 5.9 percent to $900,000. Without them, the rest of the market would look more like the lackluster resale market.

    A telling sign of further future price declines is Miller's monitoring of contracts in the works, pre-closing. Current contract price levels show an average drop of 20 percent from August 2008, said Miller, who said such price declines are a real possibility marketwide in Manhattan.

    Indeed, the first quarter will reveal the depths of the damage wrought by the implosion of the banking sector and tens of thousands of layoffs on Wall Street in a way the fourth quarter has not, said Gregory Heym, the chief economist for brokerage Brown Harris Stevens.

    His fourth quarter report showed a very slight rise in the median sales price of Manhattan apartments, both new and existing, to $895,000 from $828,000, but more financial sector job losses could lie ahead for Manhattan, which means more pain for real estate.

    "We're just going to be living with a certain degree of uncertainty for a lot longer," Heym said. "I know it's been about a year and a half and people would like things to calm down a bit but it's going to take a bit longer."
  2. Plenty of room to fall as the apartments are still way overpriced and rents are still too high.

    NYC is overbuilt, plain and simple. There is not and never really was enough income to support all these "high-end" bars/lounges/restaurant, boutique retailers and "luxury" apartments. They are shutting down one by one at the moment. As the leases end, there is noone left to start renting out all those buildings downtown. And there are few buyers for condos with exorbitant maintenance fees.
  3. How many square feet of living space is that?.....400?, 1000?, 1500? :confused:
  4. MattF


    depending on your spot/area, some of these places that close get a makeover and reopen under new management as something else...

    ...only to fail again within a short time and close...

    ...then the cycle begins anew...
  5. Brandonf

    Brandonf ET Sponsor

    How much would it cost to rent say a 900sq footish place in a nice part of either Manhatten or Brooklyn these days?
  6. 900sqft in the west village could run you around $4000, thats about a two bedroom or a large one bedroom.

    Tribeca around $3000, 2500 for gramercy...I would say in the range of 2500 to 3000 in most areas like soho, nolita, east village, murray hill etc. West Village though is still up there.
  7. upper east side has the best bang for the buck right now.

  8. Brandonf

    Brandonf ET Sponsor

    Single guy, 32 years old and self employed..what would be some good areas to look @ in terms of living in NY. Ideally I'd like to be someplace where it's going to be easy to make friends, since sitting at home all day banging on keyboards doesnt really do the trick. Also close to good resturaunts, food etc. Not having to drive will be great as anyone who's ever had the displeasure of riding in a car with me driving can attest (everyone will be safer). Thanks.
    Also, I've heard that there are some very nice areas in Brooklyn for a young single person as well, and I'd be interested in those areas too if anyone has suggestions. Thanks again.
  9. you buying or renting? I'd say soon prices are going to drop especially in the east village area, near Delancy st and south (if ur familiar with nyc) Lots of nice condos being built but no takers for a while. That whole area of the east village would be good for you. Lots of young people, def no need for a car, lots of places to eat and of course tons of bars. Not too sure about brooklyn though.