4th Quarter Average Price Declines 5.7%
Volume Surprisingly Robust

NEW YORK, NY January 3rd, 2007

The appraisal firm of Mitchell, Maxwell & Jackson Inc., (MMJ) reported in its 4th Quarter 2006 Market Measure Report that the average apartment sale price in Manhattan dropped 5.7% compared to the 3rd quarter 2006. Buyers paid an average of $1,079,363 compared to $1,144,024 the preceding quarter. The change in average sale price was the second consecutive quarterly drop and represented a 4.4% decrease from the 4th quarter of 2005. The average price for the year finished down 7.7% from the peak recorded in the 2nd quarter of 2006. Sales volume for the quarter was surprisingly robust given seasonality there were 2,244 units sold, virtually unchanged from the 3rd quarter and 7% higher than a year ago.

According to Jeffrey Jackson, Co-Founder & Chief Economist of MMJ, "Most of the market fundamentals look encouraging but it?s too early to call this the bottom. The downturn in prices which started in the 2nd quarter appears to be headed for a soft landing. When sellers lowered their expectations, buyers stepped up. Confidence was evident as sales volume which is seasonally lower in the 4th quarter actually inched up from 2,240 to 2,244 sales." Jackson stated, "Perhaps the most significant statistic was the reduction in available inventory in December, down to a 7.4 month supply from a peak in September of 10.4 months. These inventory levels are much closer to what we consider market equilibrium of 6 months."

Additional market factors at year end:

The bubble did NOT burst. Expectations of buyer and sellers moderated. The local and national economies continued to be strong.

Record High Bonuses. Wall Street is expected to pay out $23.9 billion in bonuses during the next 3 months, shattering last year's record by 17 percent.

The FED hike-and-hold policy did not negatively impact 5-30 year mortgage rates. The 30-year fixed rate that peaked near 7% in June has since receded to finish the year closer to 6.1%.

In 2006 the Equity Markets out-preformed the Real Estate Markets and the capital followed. With lower apartment valuations and higher PE ratios, real estate may be viewed as a relative value in 2007.

The 2004-6 wave of new construction is past its peak.

"While many of the nations housing markets are expected to experience further price corrections in the coming year, solid housing fundamentals in the metropolitan area combined with gains in New Yorkers personal income, should see the NYC market outperforming the national average well into the new year" Jackson said.