New York City’s real estate is looking a bit shaky right now – especially Manhattan – since the second quarter figures were released. While Manhattan held its head high amidst the country wide housing disaster for the past three years, latest statistics have shown cracks appearing. So much so, that the 38% dump in sales was hard to overlook.
The Corcoran Group, New York’s biggest residential real estate group stated that this low is the biggest in five years. This is especially concerning since this low came right in the middle of the usual hottest property season.
Pamela Liebman, Corcoran’s chief executive said: “Two years ago, you could throw up some brick, put in a kitchen and a bath, put a price on it, and you’d have a bidding war. That’s not the case any more. Buyers now feel that a property they want today could cost less tomorrow.”
This whole scenario has been blamed on the Wall Street demise. Mergers, acquisitions and deal makers find it consistently harder to get finances approved due to the credit crunch. This whole roller coaster affects the whole industry.
Even the big dogs amongst investor group find it tough going right now. Bonuses are said to drop by some 21 percent this year. Thousands of financial workers have lost their jobs over the past 12 months due to the massive $40 billion loss within the industry.
With slowed economic growth and consumer spending on a low, the situation certainly doesn’t look rosy right now. Too many people are being affected by these forces. Hopes to see an improvement in the market after the Federal Reserve’s interest rate cuts have all but vanished.
As a comparison, last year the city of Manhattan sold 31 percent more apartments in the same quarter in 2007 than this year. A massive backlog of unsold apartments has accumulated in the market place. Some 6,869 apartments were for sale in Manhattan in the second quarter.
Homes are also staying on the market longer than in the same period last year. On average this relates to about 135 days.
Naturally, where there is an oversupply of housing, catering to a lack of demand, property prices are set to fall.
Sellers can hardly keep up with the competition of outselling each other and many see themselves forced to sell lower than they really want, just to get rid of the property. On the other side of the rainbow are the investors who might just make a nice profit if they were to buy now.
A three-bedroom, 2 ½-bathroom co-op at 215 West 91st Street on the Upper West Side is listed at $1.59m, down by $60,000 from the listing price in June this year and well below the $2.4m it was listed at when it went on sale last October.
But the grim outlook doesn’t stay in the city either. Even the popular beach side retreat of the Hamptons has seen softness in the market. These beach side homes have seen even higher losses with a fall of 11 percent in the median price last year and a 29 percent price slump since 2007.
It is certainly not encouraging to see the more upmarket areas loose their market value because there is little hope left for the middle of the range. Obviously, time will tell whether and when the market will pan out and eventually rise again.
Photo credits: nycgraeme via flickr