Manhattan Apartment Prices Plunge

By J.W. Elphinstone

NEW YORK -- Apartment prices in the typically resilient Manhattan market plunged in the second quarter by the largest annual amount in decades, data released Thursday showed.

The median price fell between 13% and 19% from a year ago, according to four separate reports, and sales were off by half from last year's totals.

"The city did a nosedive. There was virtually no business," said Dottie Herman, president & CEO of Prudential Douglas Elliman, one of the largest real estate brokerages in New York.

Multimillion-dollar apartments were the hardest hit. Luxury buyers vanished as Wall Street bonuses and jobs dried up and so-called jumbo loans for anything over $729,750 remained almost nonexistent. That loan limit is less than the median price of a Manhattan apartment, which ranged from $760,000 to $849,000 in the reports.

"We're talking lenders requiring 30% to 40% down (payments) for jumbo mortgages. What does that do to someone buying a $4 million apartment?" said Jonathan Miller, president and chief executive of real estate appraisal and consulting firm Miller Samuel, which analyzed the numbers for Prudential.

The median sales price of a luxury apartment -- defined as the top 10% of all condo and co-op sales -- tumbled between 17 and 26%, while the number of sales were cut in half.

Sales of new condos were also hobbled because of recent changes in Fannie Mae (FNM Quote) financing, which has made it harder for buyers to get mortgages, Miller said. The government-controlled financier now requires a development to be 75% sold in New York before doling out any mortgages to potential condo buyers.