An influx of foreign investors, Wall Street gains and favorable mortgage rates, all contributed to a doubling of New York residential real estate sales over last year. Prices still lag, and could keep falling with an upsurge in inventory, so sellers still need to set realistic prices in order to move properties. See the following article from Property Wire for more on this.
Residential property sales in New York doubled in the first three months of 2010 compared to this time last year, according to new data but few experts expect the growth to continue.
The number of apartments sold in the city rose by 99.5%, the figures from the Prudential Douglas Elliman real estate agency show but despite the rising numbers of sales, prices remain relatively low compared with the boom years before the US housing market collapsed.
Prices fell in the single-digits on one and two bedroom apartments, but they rose on three and four bedrooms, according to the report. Prices on studios were flat.
New York has some of the highest real estate prices in the world with the average Manhattan apartment costing around $820,000 dollars. But that is around 10% less than a year ago.
‘The market is definitely recovering, with stabilized prices and a spring sales boom, but this is not yet the big turn. I am cautious,’ said Douglas Elliman, executive vice president of Ariel Cohen. ‘We have a lot of foreign buyers, including Asian and European, because of the strong euro,’ he added.
The property market is being buoyed by recent rises on Wall Street and the current low interest rates on mortgage loans offered by banks but economists believe that prices could fall as record low mortgage rates begin to climb.
Interest rates for a 30 year fixed mortgage are expected to gradually rise from a national average of 4.8% in the first quarter to as high as 5.8 or even 6% in the next 12 months. Indeed the average rate for a 30 year fixed rate mortgage climbed to 5.31% at the beginning of this month, according to the Mortgage Bankers Association. They are now at their highest level since August 2009.
‘It certainly will make it harder for people to buy homes,’ said Dean Baker, an economist and co-director of the Center for Economic and Policy Research. For example, a 5.5% rate instead of 5% on a $500,000 loan would mean paying an extra $13,000 in costs over seven years.
Jonathan Miller, president of appraiser Miller Samuel, who wrote the Elliman report, believes prices have further to fall because supply is increasing and about two thirds of the latest listings are overpriced by at least 10%.
‘Buyers out there who are sophisticated are bypassing the product that is significantly overpriced. The people who are priced correctly are seeing their properties sell,’ he added.
Other reports suggest prices are not yet recovering. The Corcoran Group, which conducts its survey with research company PropertyShark.com, said the median price in New York has dropped 11% from a year earlier. Brown Harris Stevens and Halstead Property put the decline at 10% and StreetEasy.com said the fall was 8.1%.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.