New York's Condo Sales Slow

Posted by: Amey Stone on November 10, 2005

A new report from Condo-Sales.com shows a dramatic drop in the volume of Manhattan condo sales, but no drop in prices. There were only 386 condo sales in October compared to 433 sales in September — an 18% one-month drop and the lowest number of sales this year. This result follows a 30% drop in sales from August to September.

Sounds pretty gloomy, right?

Well, take heart in these points:

- The price of condos has continued to appreciate. According to the press release, “The average apartment price hit $1.43 million, a 7 percent increase over September and a 39 percent increase over October 2004. The average price per square foot for Manhattan condos rose to $1,091, which is 2 percent over September and 27 percent over October 2004.”

- The same thing happened last year and prices and sales volume boomed in the New Year. “We may be witnessing a gradual cooling in the residential sales market, but it is not clear that the trend will continue long-term,” said Yale Robbins, whose eponymous firm runs Condo-Sales.com. “Winter has been a season of enormous activity during the past several years and numbers may pop again in early 2006.”

- The most expensive apartments were the hardest hit. "One-bedroom apartments have continued to sell well, accounting for 37 percent of the total condominium sales in Manhattan," according to Condo-Sales.com. So, if you're ready to trade up to a bigger place, there is hope for you yet.

Reader Comments

Phil

November 11, 2005 1:55 PM

Wow, what an authority -- "condo-sales.com." Then I look at the WP article cited by Dean Foust and, again, realtors and other parties with serious interest in sustaining the bubble are asked for comment. Unnamed sources are used extensively by EVERY media outlet (so much so that some have revised their editorial policies when citing such. But I'm off point). How about nosing around for a few off-the-record comments? We need frank assessments, not sunshine blown in a certain strategic location.

Adam

December 2, 2007 4:40 PM

NYC Real Estate is Extremely OVER VALUED and will come down in the next twelve months. It is a cylcle that has run its course. Nothing goes up forever!!!!

John

December 13, 2007 5:21 PM

Manhattan Condo prices arelikely to see significant price depreciation as Wall Street cools off - I know as I work in one of the big names and we are working withnumbers down 25-30%...and are not doing so bad compared to others!

The Steiner Group

March 26, 2008 4:50 AM

NY is unique... and it is a place where the energy and the spirit just pops all the time. It is a welcoming city that blurs social distinctions and is big on accomplishments and chutzpa (read brass balls). It is a city of opportunity and beginnings. It is a city that enables you to rewrite your history no matter how boring and banal your existence was elsewhere. It is anything but tranquil unless you turn off your cell phone, blackberry and pager and enter a yoga class.

Why are we more insulated then other markets? First, let me explain the different types of products and then you will see why in any given market there is not a lot of inventory.

Co-Ops:
One type of purchase and still the most prevalent is the Co Op purchase. Some view Co-Ops as Draconian and limiting, others view them as the price of getting into the "Harvard of Real of Real Estate" - a badge of merit that you were admitted to the club. If you get in, they like you - they really like you. http://www.marlenesteiner.com
If you want to buy a certain kind of home on Fifth Avenue, Park Avenue, Riverside Drive, Central Park West, West End Avenue, East End and all that is in between, then chances are you will have a brush with the co-op inventory. When purchasing a coop in Manhattan it is not just good enough to have the down-payment, you have to have that and then some, in some cases up to 2 or more times the price of the apartment in assets left over after your down payment. There are also minimum down payment requirements set up by the board of directors of each individual co-op. The amount required down is typically 25%-50 percent, less typical is all cash requirements found in certain Fifth Avenue and Park Avenue co-ops (that means no financing allowed! You have to fork it all up front (there are ways around it but that will be another blog altogether), financing for 80% and more is also less usual. Thus, if the buyer has the ability to purchase such a home, getting bank financing will not be an issue. Seventy (70%) of the housing stock in NYC is co-ops, which translates to a total of 121,925 co-ops. This is the total of co-ops that exist in Manhattan, not what is for sale now.

Townhouses or 1-3 family homes in Manhattan:
Then there is the townhouse or brownstone or freestanding house product. This is a vanishing breed in NYC. It is the last of the independents. To date, there are fewer than 20,000 brownstones all around New York, and the most prized are the 1-3 family homes. You have hit a home run if you are the owner of a one family home in Manhattan. Thus, the question to ask is how many of these 20,000 homes are available for sale at any given time and are there 20,000 people in this world that would want such a home? FYI - 3% of the housing stock is 1-3 family homes. http://www.marlenesteiner.com


Condominiums:
Condominiums are probably one of the most popular types of real estate that people in NY like to buy. One reason is that the entrance process is less stringent, dare I say practically sane relative to a co-op board admission. Here resident owners are local and foreign. It is the darling of second home buyers and investors too. Many a diligent investor financed their children's college years, their retirement years and made small fortunes on these good investments. In the last ten years there has been an explosion of new developments, many with high profile architects' fantastic amenity packages and low initial real estate taxes. Developers are constantly raising the bar and what was once a dismissive "cookie cutter product now rivals some of the finest prewar cooperatives. Now they offer views, lots of closets, high ceilings. The new condominiums are focused life style and it is luxury all the way. Currently, 19% or 33,094 apartments are condominiums.

Then there is the Cond-op the cond what????? Yes this is a hybrid - a coop with condominium rules - with more flexibility of ownership. Meaning, you can lease your home out for a profit and you have a board that is unlikely to reject your purchasers when you sell your home. This type of home is less restrictive and easier and less expensive to buy into, and less expensive to sell. Cond-ops are counted as part of the co-op package in terms of my statistics

The rest of the inventory is subsidized and or Mitchell Lama housing, which accounts for roughly 7%. Of those figures, I venture to say that the condo ratio has probably risen to at least 21% and 1-3 family homes might have gone down fractionally as some might have been sold for development deals. http://www.marlenesteiner.com

So you see, as of today the inventory is roughly 8,650 give or take a few hundred, depending on when you read this. Translated, less than 4% of the entire Manhattan housing market is for sale. That includes new construction some of which is slated to a year out or more with closings taking place in 2009 and later..

I find it interesting that people are so influenced by what they read in the newspapers when it comes to real estate. When someone calls a reporter with several sales to overseas buyers the news make it seem as if the buyers from around the globe are standing on the street corner with a sign that says I want a piece of the rock and I will pay you any price for it. There is no denying that there has been an infusion of overseas buyers but that has been going on for twenty years.

The mantra I hear from potential sellers as they prepare to list with me and others, is "Well, the overseas Buyers are buying everything in sight and they will pay the price I want because our dollar is very weak. Are you working with Buyers from Dubai, Russia, China, England... You get the drift. http://www.marlenesteiner.com

The question I am most asked about from potential buyers is; "So are they bleeding yet?" "How negotiable is the Seller?" No one wants to be perceived as the jerk that overpaid and no one wants to be the one left holding the bag.
Both remarks are valid and both bear commenting on. Here is my take from my walks around the city.

To answer the Buyer's question, When you are looking at 4% of the entire inventory for sale all over Manhattan - from Battery Park to Inwood - you are talking very low inventory. People make their homes here! They live, work, play and go to school here. Lesson to be learned - buy often and buy well! As for the Seller - wherever the Buyers are from, they are educated, they read, they shop on the Internet and do their research. They talk to the experts and their friends. They are bullish on America and they are informed. They look at price comparisons and negotiate. They buy. http://www.marlenesteiner.com

Where does the market come from? From all over. Yet there are more local buyers then you would guess from reading the hype. It is the seasoned broker who has the connections to get the word out about your fabulous property. It is the pro that will make the best match for your sale. That would be the Steiner Group at Prudential Douglas Elliman.

We are known for our organized creative and highly effective systems to get the word out to buyers. We find buyers their homes and investment properties. There is always an opportunity, and we search the market until we find the right place for you. Stay tuned for more Real Estate Wisdom. http://www.marlenesteiner.com

*Statistics are courtesy of the Real Estate Board of New York and Prudential Douglas Elliman.

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BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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