The second quarter of 2009 was not a good one for sellers in Manhattan when compared with the same quarter of 2008. Prices declined about 25% from a year earlier and closings were down a whopping 50%. But it may be that things have bottomed out as sales were up about 30% from this year’s first quarter and prices seemed to have stabilized, at least for co-ops. While condo prices have not rebounded when compared to the first quarter of the year, they’ve experienced milder pricing retreats than they’ve experienced earlier. Check out the market reports:
Prudential Douglas Elliman
Corcoran
Halstead/Brown Harris Stevens
StreetEasy
Interestingly, and unlike previous downturns, the top of the market seemed to be hit the hardest. It makes sense with so much of New York dependent upon the fortunes – and bonuses – of the financial industry.
As well, new construction took it on the chin when compared with both the second quarter of 2008 and the first quarter of 2009. These developments face a double whammy.
Many new buildings haven’t sold a sufficient number of units so as to be “approved” by banks so that purchasers can obtain mortgage financing for purchasing units in the building, On top of that, many developers aren’t free to make deals happen because of the “release price” restrictions imposed by their construction lenders. These contractual restrictions require all or some of the proceeds from a unit’s sale to go directly to repay the developer’s bank loans. Consequently, developers are often precluded from reducing prices as much as they might otherwise in order to meet the market.
It’s important to note that sales reports are lagging indicators because they’re comprised of information based on closings, not contract signings. And closings can take three or more months because of the time required for financing commitment letters, co-op board approvals, and condo board waivers of their rights-of-first approval. More timely anecdotal information seems to indicate some pick-up in the market in the latter part of the second quarter. Also, recently announced robust second quarter earnings reports by Goldman Sachs and JP Morgan Chase raise the prospect of at least some bonus money becoming available once again to help grease the market, although not every bank’s second quarter results bode as well.
For more information, check out these links articles and commentary:
Sharp price drops in Manhattan apartments (NY Times)
July State O’ the Market (Curbed)
Manhattan Home Sales off Record 50% (The Real Deal)
Manhattan Q2 Report Thoughts (Urban Digs)
