In New York City's real estate market, prices continue to rise and sales remain strong, defying the general housing malaise affecting the rest of the country.
Record Wall Street bonus money helped Manhattan apartment sales climb 73% in the first quarter to 3,474 units from 2,005 units a year earlier, according to a Prudential Douglas Elliman report released Tuesday.
Listing inventory levels fell 14% to 5,923 units, and the median sales price rose 1.2%.
"Demand through the end of last year and this quarter has eaten through inventory levels," says Jonathan Miller, president of Miller Samuel, a New York appraisal firm that helps prepare the report.
While overall demand was healthy in the city, part of the first-quarter sales surge was due to the addition of co-ops into public record, a move that started in the middle of the third quarter of 2006. Miller estimates that this addition accounted for about 33% of the latest increase, since counting co-op sales is now almost as easy as tracking condo sales.
Although inventory was down in the quarter, the level remains higher than the average quarterly inventory of 5,200 units over the past five years, Miller says. The city's housing inventory is likely to rise in coming months in anticipation of the hot spring selling season, which accounts for the biggest percentage of annual sales.
The recent spike in subprime and Alt-A mortgage defaults has caused lenders across the nation to tighten up underwriting standards. For New York City sales, lenders are actually reading appraisals now, Miller says, rather than just rubber-stamping them as they did in previous years.
The other offshoot of tightened lending is that Manhattan co-op boards are becoming pickier about income qualifications, says Tresa Hall, director of sales with the Corcoran Group.
The issue comes up often with Wall Street workers, whose bonuses often far outweigh their salaries.
"If someone gets a salary of $220,000 and a bonus of $3 million, that makes
the boards nervous in a way," Hall says, since next year's bonus is unpredictable.
The Corcoran Group, which caters to the higher end of the apartment market, said the median sales price in Manhattan rose 5% in the quarter. In Brooklyn, the median price jumped 12%.
The New York sales numbers compare to weaker numbers nationally. Last week, the Commerce Department reported much-worse-than-expected
new-home sales data for February, with sales dropping 3.9% from January and inventories hitting new highs.
The National Association of Realtors recently reported that sales of existing homes climbed nearly 4% in February, beating economists' estimates. However, the NAR report said prices fell 1.3% year over year to $212,800 in February.
earnings call in late February, the homebuilder said the New York City market remains the best in the country, while the rest of the country is generally in a funk.
Toll Brothers is building several condo projects in Manhattan and Brooklyn. Robert Toll, the company's CEO, said the New York City market is unique because it has not declined to the degree most other markets have in the past 12 to 18 months.
"It did experience some softness in the second half of '06 due to consumer concern about the direction of home prices, but this concern appears to have dramatically reversed itself, starting in January of '07," Toll said.
Toll's comments are interesting since he believes the New York City market offers a glimpse of what one might see nationally when consumer confidence rebounds. "We believe that pent-up demand is building in many markets as potential buyers bide their time until they are confident prices have firmed," Toll said.