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01.07.2005
 Wall Street Journal

NYC Apartment Sales off 13% Refi's Up 54%

By Janet Morrissey
Dow Jones Newswires

NEW YORK -- Apartment sales fell 13% in Manhattan in January, while refinancings rose 54%, according to a new study.

The report, issued by appraisal company Mitchell, Maxwell & Jackson Inc., found 404 signed contracts in January, down from 467 in December. At the same time, refinancings surged as homeowners began seeking out hybrid mortgages to replace their adjustable rate mortgages.

"During the past 12 months, the Federal Reserve has raised the discount rate six times from 1% to 2.5% making ARMs much more expensive," said Jeffrey Jackson, chief economist at Mitchell, Maxwell & Jackson.

During this period, longer and mid-term rates have remained about the same with the 30-year fixed still trading below 6%.

"This is what economists refer to as a flattening of the yield curve,"' said Jackson. "Clearly, the transition made sense to a large segment of New Yorkers wanting to limit their mortgage risk," he said. This is the largest refinance increase since March of 2004, he noted.

The average 30-year fixed rate mortgage dipped to 5.8% from 5.83%.

The median price of homes sold in January was $650,000, up 1% from $643,000 in December and up 16% from $560,000 in January 2004.

The number of homes sold for $1.5 million or less in January fell 14%, while homes selling for $3 million or more dropped 8.5%, the report said.

Sales declined in all neighborhoods, except Midtown, where sales rose 3%.

-By Janet Morrissey, Dow Jones Newswires

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