The number of Manhattan apartments sold increased by 100 percent year-over-year in the first quarter of 2010. While the median sale prices continue to decline, there is anecdotal evidence of higher asking prices and rejection of low offers. See the following article from The Street for more on this.
Manhattan, New York apartment reports for first quarter 2010 are out. As I’ve predicted since four months ago, the reports show that prices declined while sales jumped.
I’ve said that the real time market bottom for Manhattan apartments was the fourth quarter of 2009. This means that when the first quarter of 2010 reports released by the city’s major brokerages come out, they would show a price decline. This is because the first quarter report reflects prices agreed upon in the fourth quarter of 2009.
The Manhattan apartment market reports released by Miller Samuel, Corcoran, Halstead and Brown Harris Stevens are directionally the same. Miller Samuel shows the median price of a Manhattan apartment in the first quarter 2010 was $868,000. Number of sales was 2,384, a 100 percent increase compared to the prior year. Average price per square foot was $1,038, a 1.2 percent decline compared to the previous quarter but an 18 percent decline compared to the year before.
The data confirms my prediction that during this downturn, Manhattan apartment prices, based on price per square foot, was lowest for closings in the first quarter of 2010.
Alternatively, contracted prices were lowest in the fourth quarter of 2009. The reason is that these reports lag three months relative to when prices were agreed upon because property takes three months to close. Most readers don’t know this. Even reporters who write these articles don’t know the significance of this three-month lag. This is the context that these market reports have to be evaluated upon.
But how do I know that fourth quarter 2009 contract prices, hence this first quarter 2010 report, was the market bottom for Manhattan apartments?
Firstly, the 100 percent jump in sales shows the Manhattan apartment market has come back.
Secondly, I’m a real estate broker and not a reporter. I view properties, analyze comparables and negotiate prices every day. I see contracted prices going up relative to last quarter. Properties stay on the market for a shorter time. And I see sellers not countering my bids because they claim having offers that are almost close to the ask price. In one example, the response was short and sweet, “Sorry not interested. Offer too low.”
In real time, prices agreed upon during the first quarter are higher than prices agreed upon in the fourth quarter of 2009. My prediction is that the Manhattan apartment report to be released in the second quarter of 2010 will show a price increase. Yes – prices are coming back up. You will need to wait three months to read it in the news.
A tip – never rely solely on the real estate market reports. If you do, you are relying on three-month old data.
Wei Min, CEO of Castle Avenue Partners, is a real estate entrepreneur focused on brokerage, investments and management.
This article has been republished from The Street. You can also view this article at The Street, an investment news and analysis site.