NEW YORK, July 1 (Reuters) – Manhattan apartment prices were flat instead of down in the second quarter as the market, recently battered by upheaval on Wall Street, returned to normal sales and inventory levels, according to reports released on Thursday by New York City’s biggest brokerages.
The average price per square foot fell 0.5 percent in the second quarter from a year earlier to $1,051, according to a report by Prudential Douglas Elliman. The Corcoran Report said the figure rose 1 percent year-over-year.
“It would seem we’re moving sideways,” said Jonathan Miller, who writes the Elliman report. “It’s premature to call it a recovery because the word recovery means getting better. When people say recovery here what they’re really saying is not getting worse. But that’s as far as it goes.”
Median prices suggest a slightly more positive story, with StreetEasy.com’s report showing a 2.6 percent increase year-over-year to $800,000. Elliman shows a 7.6 percent increase to $899,000.
But that appreciation reflects an easy comparison with last year, when the market was “anemic,” said Sofia Song of StreetEasy.com, a real estate information website.
Also, the average size of apartments sold rose 9.7 percent, Miller pointed out, which meant bigger and therefore more expensive apartments made up a greater percentage of sales.
Prices should be up more strongly in the second quarter, according to normal seasonal patterns, Song said.
The psychological impact of the federal tax credit for first-time homebuyers helped hold prices steady, said Corcoran Chief Executive Pam Liebman.
Many Manhattan homebuyers’ incomes exceed the credit’s $125,000 cap, but it had an impact anyway.
“It just got a lot of people thinking that it was a good time to buy,” she said.
A HIGH TIME
Indeed, sales increased by 80 percent, while inventory rose, but only slightly, Miller said.
But that just means sales and inventory are consistent with their 10-year averages, Miller said.
“There’s a danger of being really Pollyanna here,” Miller said. “What we’ve done is go from a very low place to a normal place.”
The high end of the market showed unexpected strength in the second quarter, Liebman said, with prices of apartments with at least 3 bedrooms rising 5 percent to $2.8 million.
Three-bedroom apartments accounted for 18 percent of sales this quarter, compared with 12 percent last quarter and 12 percent a year ago, Miller said.
“We’ve seen more traction in the upper end of the market,” he said, noting that in a typical Manhattan housing cycle the low end of the market returns first after a correction, while the higher end reenters later. That happened in this case as well, with significant activity in 2009 occurring in smaller, more affordable studios and one-bedrooms after the 2008 fall in prices.
Likewise, prices are strongest in Manhattan’s most coveted luxury neighborhoods, especially parts of the Upper West Side and the “Gold Coast” on Fifth Avenue, Liebman said.
“In parts of the market there’s a real shortage of inventory,” she said. “You’ll see appreciation in those parts of the market.
THE OLD NORMAL
But in general, prices will not rise in the third quarter, Liebman said: “You might see a slight uptick, but at this point prices are staying relatively flat.”
Certain neighborhoods, such as the Financial District, which is oversupplied with inventory, will not see price increases in the near term, she added.
And studios and one-bedrooms have seen less activity since the expiration of the tax credit on April 30, she said.
Prices will stay flat, Liebman said, absent significant job growth and a surge of confidence in the economy.
Song and Miller also said macroeconomic conditions will damp any possible price appreciation in the Manhattan apartment market.
“There are a lot of things going on right now that make everybody apprehensive,” said Song, who also said she would not be surprised if prices actually dipped again in the third quarter. “There’s a lot of uncertainty. There’s no clear sign of improvement.” (Reporting by Helen Chernikoff; Editing by Steve Orlofsky)