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Wednesday, October 3, 2007

Tribeca homes jump 36% in third quarter 2007

tribecaThird quarter 2007 sales numbers were released a couple of days ago by all of the major NYC brokerages including The Corcoran Group, and the results showed very clearly that the Manhattan real estate market was still red hot. The news was released almost simultaneously as the Stock Market peaked at a new all time high, shaking off the uncertainty caused by the sub-prime mortgage jitters, as the damage is increasingly seen on Wall Street as being manageable. I'll be posting the entire Q3 Corcoran Report on the market as soon as the downloadable versions are ready, but I'd like to take a moment to look at the downtown numbers and particularly those of my own neighborhood of Tribeca.

third quarter sales 2007 vs. 2006

category
average sale
median sale
per sq. ft.
closed deals
market-wide
2007
$1,414,000
$895,000
$1104
3588
2006
$1,236,000
$849,000
$1047
2996
change
14%
5%
5%
20%
downtown
2007
$1,110,000
$715,000
$1,096
277
2006
$928,000
$675,000
$964
607
change
20%
6%
14%
-54%
lofts
2007
$2,502,000
$2,089,000
$1,209
286
2006
$1,620,000
$1,395,000
$1,175
456
change
54%
50%
3%
-37%
Tribeca
2007
$2,286,000
$2,300,000
$1,243
71
2006
$1,843,000
$1,695,000
$1,353
213
change
25%
36%
-8%
-67%

figures shown are for co-ops and condos combined

Corcoran reported that the median selling price of a home in Tribeca, that's the price most people paid for a home, was $2.3 million, up 36% over Q3 2006; the average sale price was $2.286 million, up 25% over Q3 2006. Price per square foot was down by -8% indicating that the deals closed were on larger homes. Manhattan-wide, the number of deals closed was up by 20%, however fewer deals were done with -54% closed when compared with a year earlier. I believe that this actually reflects a shortage of inventory downtown as prices have risen, indicating increased competition for whatever is available.

"Tribecca has arrived, its median sales price jumped 36 percent from a year ago to $2.3 million, Corcoran's data showed, pricier than Central Park West's $1.6 million median price"
NEWSDAY, ELLEN YAN & TAMI LUHBY

101 Warren St., TribecaIt's no surprise to me that Tribeca has transformed into a prime real estate destination. I've lived here for eleven years and seen it change from an enclave of warehouses and artist lofts into something much different. The neighborhood today has some world renowned restaurants, green parks, access to the Hudson River esplanade and even a new Whole Foods market coming at the soon to be completed 101 Warren St., which is one of the finest residential buildings going up in the city today. The quality of the developments and the genteel, but still un-stuffy flavor of the area, attracts a diverse community that appreciates the splendid architecture and generally larger loft homes.

Market-wide the city did well showing an overall boost in average sale prices of 14% over a year earlier. By comparison, downtown (below 34th street) outpaced the broader NYC market showing a gain of 20%. Lofts homes which are generally concentrated in downtown neighborhoods reflected an average gain of 54% and a median price increase of 50%. Jonathan Miller of Radar Logic, which tracks market data for another brokerage, is quoted in the press saying that Manhattan housing inventory fell 31.7% and sold a bit faster too. So the effect of the "glut" of condo properties coming on the market, which was supposed to send prices crashing, turns out to not even be keeping pace with the demand.

There are a significant number of contracts signed in new developments that were sold in the pre-construction phase and are waiting to close. So the real impact of the volume of business transacted now is being spread out over longer time frames than with traditional re-sale properties. In my opinion, it's more valid to look at the year over year figures, rather than in the short term to gain insight into the health of the Manhattan market overall lately.

Amidst the overwhelmingly positive news, many journalists injected a note of caution, pointing out that foreclosures are up in the outer boroughs, and that Q3 sales figures reflect homes that went into contract before credit began tightening. It's true that re-sale housing data lags activity on the ground by a few months— but we are still seeing strong activity in my office, and company wide. Much of the activity is related to customers purchasing in new construction. The effects, if any, of stricter mortgage underwriting will not show up until Q4 2007 or Q1 2008. In the media, its getting played like a movie serial's cliffhanger endings. Stay tuned, and buy another issue to see how it all turns out. Who knows if New York Magazine will be able to continue to trade on our anxiety with another "...How Long Before Our Real Estate Bubble Pops?" cover line, paid off with a "...Not in New York. Not Yet" headline on the inside package, a peculiar kind of editorial balance. Stay tuned!