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Has the Manhattan residential real estate market found its footing again? Prices have generally dropped about 15% from the fourth quarter of 2008 when the financial crisis began to apply downward pressure. The uncertainty of the economy in the first half of 2009, has lead to a release of pent up demand in the second half. In December of 2009 signed contracts for condos were up 48%, and co-ops up 157%.
Supply is shrinking and buyer activity, catalyzed by lower prices, is picking up. In Q4 2009 the story was about the available inventory of apartments. It was actually absorbed by 36%, and stands at about the same level as in 2007, at the height of the market (see chart below). That to me is the most striking metric. It is exactly the opposite of what was happening just before the market began to slide, as inventory built, and demand halted due to the financial crisis. Corcoran's entire Manhattan market report is available for download here. It has in-depth metrics on sales activity in the fourth quarter of 2009 and compares them to a year earlier.
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What it means if your a buyer is that the time is now, if you've been sitting on the sidelines. Interest rates are still fairly low for the moment and there are special tax credits available for some buyers. If you are a seller it means that there is a marketplace again for your property, if it is priced well and marketed properly.
When price appreciation will begin is anybody's guess. My opinion is that we've hit a point of price equilibrium now. It is a delicate balance which may be the beginning of a recovery; but it will be difficult for prices to rise significantly without greater employment and a more robust overall economy. I think we will see a market which has some stability, but little if any appreciation in the near term. If you are waiting for market prices to get back up to their peak to sell your home, you will be likely measuring that distance in years.
where are the opportunities?
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For first time buyers, it's a no brainer to buy now while prices are on a dip, mortgage rates low, and tax incentives are out there. If you are looking to sell and buy simultaneously, you're going to find both challenges and real opportunities in this market. It's no surprise to find that one bedroom buyers moving from rental to ownership comprised the biggest segment of buyers in the chart above. People also traded up to larger units, taking advantage of the dip in the market. Downtown Manhattan had stronger demand, on a relative basis, than other parts of the city. Your personal real estate strategy always requires looking at what and when you may have purchased, and what and where you are looking to buy. I help clients navigate those decisions every day. As always, please let me know if you have questions about the Q4 2009 market report.
» download the fourth quarter 2009 manhattan market report