If you missed it, there was a ton of hubbub, brouhaha, ado, over the 4th quarter numbers for the end of the year.
I’ll include the quote from the BHS report.
“A sharp decline in condo sales brought the overall average and median Manhattan apartment sales price lower over the past year.
The number of condo closings fell 24% from the fourth quarter of 2010, which meant condos accounted for only 40% of all apartment sales.
A year ago, condos were 46% of sales, and since condos are generally more expensive than co-ops, a decline in their share of the market can bring the overall average apartment price lower.
At $1,391,745, the average price for a Manhattan apartment was 3% lower than during 2010’s fourth quarter, while the median price fell 7% to $785,000.
However, looking at co-op and condo prices separately shows us that much of this decline was due to the lower percentage of condo sales.”
Unfortunately, the media expects to have a quarterly pulse of the housing market.
But quarter to quarter is so difficult to really show trends, even year over year.
One new development skews all of the numbers- and in general there is often not enough sample size to make a huge dent.
I’m probably getting a little too deep in the numbers, but often my clients are surprised with how few actual apartments trade on an annual basis- there is certainly more than a 1:1 ratio of brokers to annual apartment sales
in New York City.
Which is sad, but not surprising.
“The average co-op price of $1,149,203 in the fourth quarter was just 1% lower than a year ago, helped by an 18% increase in the average price for three-bedroom and larger units.”
This is exactly what I am seeing in my business- and probably the most helpful piece of information for buyers.
For condos, the average price rose 4% over the past year to $1,825,728 despite the decline in closings, which were led by an 8% gain in the average price of studio apartments.The economic and financial turmoil that began in the late summer led to fewer transactions than a year ago.
I don’t know that I agree- certainly the 4th quarter
of 2010 saw fewer small apartments sell (studios and 1brs), which was a hangover due to the $8000 buyer credit in early 2010.
That credit skewed 2010, and by comparison skewed the numbers.
What I actually believe is that small apartment sales are still down, but look a little better than a very bad
4th quarter of 2010.
“Overall, there were 13% fewer closings than in the fourth quarter of 2010, when the threatened expiration of the Bush tax cuts led many high-end owners to sell before the year ended.
While condo sales fell 24% during this time, co-op sales fell by just 4%.”
Do you believe this?
I experienced a little bit of this rush to sell by end of year- but certainly there are those same pressures in any tax environment due to tax implications of closing on one side of the year end or the other.
I think that European pressures were a huge distraction on condo purchases at the end of the year, and that was the main driver, not the tax issues.
I’m assuming that you have read my other posts about foreign buyers driving the condo market.
“Job growth slowed in both the U.S. and New York City in the second half of 2011.
Through November, 49,300 jobs were added in NYC in 2011, down from 52,700 in the first 11 months of 2010.
The city’s unemployment rate in November was 8.9%, the same level as the beginning of 2011.
While there has been stagnation in hiring recently, New York’s recovery remains well ahead of schedule.
This combined with a relatively low rate of available apartments has led the Manhattan market to continue to outperform the rest of the nation.”
I think this is incredibly significant to factor in.
Primary home buyers are snapping up good cooperative properties across the city- we are seeing buyers come off the sideline.
Job security is up, New Yorkers to a large degree feel the worst has passed, despite what the rest of the country may feel, Case-Shiller Indices, etc.
So what really happened in 2011?
The economy improved a bit, sales volume picked up in most parts of the city,
but it’s not enough
to call it a
trend across all of New York City.
I will wait to see the 4th quarter absorption rate, which has not yet come out.
They may be waiting for this lagging info from end of January to be most accurate- I expect that it
will show that there are less apartments now than there were, in combination with the trend of more, not less, volume.
Putting the high end of the market (let’s call this $6mm and up) to the side for a moment, what we are seeing is that
pricing was generally not impacted – that is, we didn’t see a strong trend up or down for sales prices.
Mortgage rates have stayed low, inventory is shrinking.
Something will give- and the 4th quarter numbers are not going to reflect this shift.
What I think happened is that a good number of properties closed at the very end of the year, given where Christmas was this year, and things did not get filed in time for 4th quarter reports- the adjusted numbers
should show an even to up overall pricing path, with almost no segment of the market being down, really.
This is good news!
We have something to celebrate now that the holidays have passed.
Now let’s sell some apartments.
Have a great week, Scott