Apartment Sales Remain Vigorous in Manhattan

By JOSH BARBANEL
Despite slowing sales and continuing economic worries, market studies released yesterday showed that the Manhattan co-op and condominium market remained strong in the peak spring selling season, with prices up 25 percent or more compared with a year ago, and overall prices roughly flat or just below record levels.
Average prices reached about $1.67 million for a Manhattan apartment in the second quarter, 1 percent to 3 percent below the record levels reported in the previous quarter, according to the series of competing market studies prepared by the major brokerage firms in New York City.
But these figures include a number of closings over the winter at two immensely expensive new condominium projects — the Plaza Hotel on Fifth Avenue and 15 Central Park West — that drove up average prices in the first quarter.
When these high-end sales were excluded for the second quarter, Gregory J. Heym, the chief economist of both Halstead Property and Brown Harris Stevens, said his figures still showed that average sales prices were actually up about 5 percent over the first quarter. “Prices are at incredibly high levels,” Mr. Heym said.
Yet Mr. Heym and other analysts said there was increasing concern that prices would remain flat or perhaps decline over the next year, especially if the economy continued to weaken. So far, he said, despite reports of recent and impending layoffs, the local economy has “yet to show any real weakness.”
While luxury sales remained very strong, the reports showed slowing sales and weakening prices for studios and one-bedroom apartments, where buyers are extremely sensitive to tighter lending requirements and larger down payments now being demanded by mortgage lenders.
The number of sales dropped sharply, by about 22 percent, compared with the second quarter of 2007, which was a record year for sales, according to an analysis released by Prudential Douglas Elliman. But at the same time, the number of sales was higher compared with the same period in 2006.
The inventory of unsold apartments rose to 9,968 in the second quarter, 21 percent higher than the year before, according to a tally by the Corcoran Group. But the total number of apartments listed for sale in June had fallen by 1.2 percent since April, and was reported to be below inventory levels of several years ago.
Strong luxury sales and faltering studio sales had the perverse effect of catapulting the median price — the price of the apartment exactly in the middle of all sale prices — to a record. It was close to or slightly above $1 million, depending on the report.
The report by Prudential Douglas Elliman found that average co-op prices fell by 8 percent compared with the previous quarter, to $1.28 million, while the average condo price fell by 2.3 percent, to $1.94 million.
Pamela Liebman, the president and chief executive of the Corcoran Group, said there was “a lot of pressure on one-bedrooms and studios” but that “anyone who thinks price appreciation is over in this market is dreaming.”
The flat sales picture has led many brokers to look back on 2007 as the golden age of Manhattan real estate, when inventory was falling and prices were rising regularly to new records.
Ms. Liebman said that while “everything was perfect in 2007,” the party was far from over. “It is still a party,” she said. “We are just not serving Cristal.”
Jonathan J. Miller, the president of Miller Samuel Inc, an appraisal firm, who prepares the market report for Prudential Douglas Elliman, said that the decline in average prices was the first since the fall of 2006, and could augur a turning point in the market.
“We are looking at several years of lackluster performance at best,” Mr. Miller said.
Dorothy Herman, president and chief executive of Prudential Douglas Elliman, said that “obviously the frenzy mentality is gone,” and she predicted that the market would be flat or down slightly during the rest of the year.
She said buyers were cautious and price sensitive, and lenders were requiring a lot more cash down. Still, she said, “New York was different from the rest of the country,” and she said that bidding wars over well-priced apartments would continue. “I don’t think New York is going to collapse,” she said.
For the first time, the report by the Corcoran Group distinguished sales of new condo and co-op apartments from sales of existing apartments, which is similar to the way real estate sales data is collected across the country.
The report found that the average sales price of existing apartments rose 10 percent compared with a year ago, to $1.43 million, and fell 8 percent from the first quarter. But average sale prices at new developments rose to $2.2 million, a 61 percent increase from a year ago, and a 17 percent increase from the first quarter.
In Brooklyn, the report found that co-op and condo prices rose 5 percent in the first half of 2008 compared with a year earlier, to an average of $621,000. In Williamsburg, where the prices were highest, the average price fell by 26 percent. The average price of a single-family town house fell by 17 percent in Brooklyn, to $1.2 million.
Hall F. Willkie, the president of Brown Harris Stevens, said that the market reports reflected closed sales, based on contracts that were signed in the last 3 to 12 months. But based on contracts signed recently, he said that sales were off 16 percent this year, but the total value of sales was roughly equal to the total value of sales a year ago.
“If properties are priced within their value range, they sell and they sell well,” he said.
This article has been revised to reflect the following correction:
Correction: July 3, 2008 An article on Wednesday about second-quarter reports on the Manhattan real estate market misstated the period of time over which average co-op prices fell by 8 percent, according to Prudential Douglas Elliman. It was since the previous quarter, not the previous year.