April 1st 2011
The Real Deal
Last month, the U.S. Commerce Department announced that sales of new homes nationwide plunged to levels not seen since 1963. Meanwhile, political turmoil raged across the Middle East, and Japan lost thousands to a devastating earthquake and tsunami.
By contrast, the big real estate news in Manhattan was a new record-high sale price at the Plaza.
Late last month, the Post reported that Russian composer Igor Krutoy closed on a $48 million purchase of a 6,000-square-foot Plaza spread. The sale — which first made news in February, when it went into contract — is one in a string of recent big-ticket deals. And it represents the highest price ever paid for a single condo unit in New York City.
As the busy spring selling season picks up steam, Manhattan home-seekers seem oblivious to the chaos around them.
“As tragic and disturbing as they are, the current world events are not affecting my business,” said Louise Phillips Forbes, an executive vice president at Halstead Property who last month listed a three-bedroom co-op at 210 West 90th Street for $3.49 million.
Brokers say this spring feels like the strongest for the New York real estate market since the Lehman Brothers collapse.
“There is an urgency to put in offers and conclude deals that was not there in 2009 and 2010,” said Wendy Greenbaum, executive managing director at Warburg Realty, who said some 75 people attended an open house for a new exclusive listing last month. “We have been seeing new listings being sold quickly to buyers who attend the first open house and make an offer immediately.”
Tom Doyle, a senior vice president at Sotheby’s International Realty, said he currently has signed contracts on two of his exclusives: a 4,478-square-foot loft at 60 Beach Street in Tribeca listed at $5.97 million, and a 2,177-square-foot triplex at Soho’s 109 Mercer Street asking $4.97 million. “Desirable apartments [are] going into contract within a week or two of being listed,” he said.
Much of this feeling of urgency is due to an ongoing shortage of desirable inventory, which is creating bidding wars on some new-to-the-market apartments. “There is definitely much less inventory this year than in prior years,” said Ken Shvetz, a senior associate salesperson at City Connections Realty.
According to a market report released April 1 by Prudential Douglas Elliman, active inventory of Manhattan apartments in the first quarter was the lowest of any first quarter since 2007, and has dropped 5.3 percent from a year ago. Moreover, the absorption rate — the amount of time it would take for all of Manhattan’s inventory to be sold at the current rate — dropped to 9.5 months in the first quarter, down from 10.1 months in the same period last year.
But the preparer of the Manhattan report, Miller Samuel CEO and president Jonathan Miller, noted that overall inventory is still on par with the 10-year average for the city. Plus, sales volume is generally the same as it was last year at this time: There were 2,394 closed sales in the first quarter of 2011, up slightly from 2,384 in the same period of last year.
This indicates that while brokers complain about a shortage of product, the city still has a large amount of less-than-desirable inventory — properties that have sat on the market for a while, or are overpriced.
However, data shows that those apartments have finally begun to sell in greater numbers, Miller said.
“You’re seeing older properties be absorbed,” he said.
“Stale inventory is beginning to move,” agreed Forbes.
That may be one reason why average year-over-year prices dropped in the first quarter. According to the Elliman report, the median price of a Manhattan apartment fell 9.9 percent to $782,071 from $868,000 in the first quarter of last year. The average sale price fell 6.7 percent to $1.33 million, from $1.43 million in the prior-year quarter. Another factor is that an unusually high number of co-ops — which tend to be lower-priced than condos — sold in the first quarter, Miller said, while the market share of three- and four-bedroom apartments dropped from 16 percent to 13 percent.
Brokers acknowledged that Manhattan likely cannot remain insulated from the chaos abroad for long — especially in a city where international buyers are an integral part of the market.
“World events have not yet impacted the New York City real estate market, but we will have to keep an eye on any economic shift, as we are still in the early stages of the tragedy [in Japan],” said Robin Stein, a senior vice president at Sotheby’s International Realty.
“I think all the events will slow the economic recovery, and start [a] ripple effect in New York City in the upcoming months,” said Naomi Muramatsu, director of sales at Bond New York. “People are not really concerned yet, but if the equity market weakens for an extended period, buyers’ confidence and their portfolios will be affected.”
For some real estate professionals, the tumult is already having an impact.
Adrian Silvestre, a senior associate salesperson at Citi Habitats, said he is currently working with a Japanese couple searching for a pied-a-terre in the West Village.
“Because of the recent tragic events in Japan, the husband had to fly back to Tokyo, which in turn has put our search — understandably — on hold,” he said.