Prices Rise, but Sales of Condos And Co-ops Slow in New York

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Prices Rise, but Sales of Condos
And Co-ops Slow in New York

By Michael Corkery
From The Wall Street Journal Online

Sale prices of condominiums and co-ops in Manhattan continued to rise last year, but there was a sizable decrease in the number of sales, according to reports by two of the city's largest real-estate brokers.

Corcoran Group reported the number of sales of Manhattan condos and co-ops dropped by about one-third from 2004 to 2005. Similarly, Prudential Douglas Elliman said sales slipped 27.2% in the fourth quarter compared with a year earlier.

While housing in Manhattan is unique because of the large number of wealthy buyers and barriers to new development -- especially the lack of available land -- the city is watched for possible trends that could emerge in other U.S. cities.

"What you are seeing is a pause, a holdback," says Jonathan Miller, president and chief executive officer of Miller Samuel, a real-estate appraisal firm based in New York that prepared the Prudential Douglas Elliman report. The decrease in the number of sales came as inventory returned to normal levels after being unusually low in recent years, Mr. Miller says.

Pamela Liebman, Corcoran's CEO and president, says rising interest rates and downbeat media coverage about the housing market have made buyers more patient and less eager to snap up something immediately.

"The falloff in volume came as buyers took a pause and said, 'We've got a lot more selection and a lot more power,' " Ms. Liebman says.

Certainly, Big Apple property prices remain sky high. Corcoran reported that the average sale price of a Manhattan apartment was about $1.2 million in 2005, a 28% jump from 2004. Other brokers, however, have been seeing more-modest price increases. Halstead Property said the average price of a Manhattan apartment in the fourth quarter of 2005 rose 4% from a year earlier to $1.1 million.

But in a city with an abundance of multimillion-dollar flats, a New York broker's tally of average prices can be skewed by sales of large luxury apartments and the appreciation of prices across the market, especially at the beginning of last year. Average sale prices rose last year, driven partly by sales of ultraluxury properties. Ms. Liebman says the very-high-end sales, of more than $10 million, are booming. "People with extreme wealth are buying trophy properties," she says.

While prices continue to move up, in some cases condos and co-ops are staying on the market longer. According to Prudential Douglas Elliman, it took an average of 137 days to sell an apartment in the fourth quarter of 2005, compared with an average of 96 days a year earlier.

"Now there is competition [from other sellers], and you might have to come down in price," says Dorothy Herman, Prudential Douglas Elliman's CEO and president.

Indeed, toward the end of last year Corcoran began seeing a decrease in average housing prices. Average sale prices of condos and co-ops in the fourth quarter decreased by 7% from the third quarter to $1.1 million. Sales activity in the fourth quarter was also slow.

Mr. Miller, of Miller Samuel, says the beginning of 2006 could see more sales activity. One reason is that many New Yorkers who work in the financial sector typically use their year-end bonuses to buy real estate.