I’ve read through a few different reports in the past month analyzing various home sales stats in Manhattan.  Clearly we’re down year over year in terms of average and median home sales prices.  The good news is that those price declines have only averaged 10-12%, vs. some estimates of 15-20%.  As one would expect, those are broad numbers which don’t take into consideration factors such as condo vs. co-op, and low-mid, mid-high, or high-ultra high priced apartments.  The price movements within each of those sub-divisions could be its own story.  The Real Deal also reports that the sales stats vary widely between different brokers.  For example Elliman, Brown Harris and Halstead reported smaller price declines and sales decreases than Corcoran–likely explained by Corcoran’s large effort to market new-construction condominiums.

The good news which can be extracted from these ‘declines’ is that the market has improved dramatically since March, a point when the Dow Jones hovered around 6,500 and real estate activity seemed to be somewhat frozen.  The uncertainty in both the real estate and stock markets was compounded by a lending issue–banks didn’t want to get caught up in the mess by either lending in buildings which weren’t selling well or by giving money to people who wouldn’t be able to repay the loans.  And while banks are lending ‘more now’ than they were, its still an utter mess trying to get a loan unless you’ve got a 750+ credit score and a plethora of income and assets. 

The trend we’ve noticed here at the New York Condo Blog, at least in terms of our readers, has been that people are looking for the same amount of space but for less money, supporting those stats about drops in median home prices.  For example, lots of people have popped up looking for 2-bedroom apartments in the 650-800K price range.  Typically that would be a bit low–perhaps impossible for a condo.  It is possible to find co-ops in that price range but not the luxurious doorman buildings which are often the most desirable.  Buyers are willing to make concessions on luxuries if it means finding the same amount of space at a lower price.  Perhaps the days of 650,000 2-bedrooms are coming back.  Wouldn’t that be nice. 

The $8,000 tax credit was a positive factor in the New York City market in 2009, but moreso in Brooklyn, Queens and LIC.  We had several readers feel the ‘rush to buy’ to get that tax credit on their return for 2009.  Thank you government for helping to float the housing market! It has (sort of) worked.   Along these lines, I’d still be cautious going into 2010 about buying in the city.  It is absolutely possible that prices will slide another 5, even 10%.  The economy is still fundamentally weak and it can’t be ignored that the government through tax credits, cash-for-clunkers, etc, is propping us up.  That is good for consumer confidence levels but buyers should be careful not to get ‘trapped’ in anotherwise weak economy.  If you’re buying and plan to live in your home for 5+ years, I think now is an OK time to jump in.  If you’re time frame is shorter or you’re buying to flip it’s still very risky out there. 

As always, e-mail me your questions or comments.

James Hathaway

This entry was posted on Friday, October 2nd, 2009 at 1:54 pm and is filed under NY Condo Blog. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.