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07.03.2006
 As Inventories Rise, NY Housing Market Supported by Record Bonuses

2nd Quarter Average Sale Price and Volume Virtually Unchanged

NEW YORK, NY – July 3rd, 2006 – Mitchell, Maxwell & Jackson Inc., reported in its 2nd Quarter Market Measure Report that the average apartment sale price rose by only 0.2% to $1,169,000 from $1,168,000 the previous quarter and was 3% higher than the same time one year ago. The MMJ sales volume index declined by just 1.5% from 1,365 to 1,345 and was 9% lower than last year.

“The 2nd quarter numbers show a return to a more normal market.” said Jeffrey Jackson, Co-Founder & Chief Economist of MMJ “Gains in the high-net worth income sector have been supporting the larger market. The best indicator of how efficient the market has been is to look at how the increase in available inventory has not resulted in a wholesale decline in prices. We noticed some new housing being re-positioned as rental, and other projects postponed all together. Inventory levels rose another 6% from the first quarter and now stand at a 10 month supply. Inventory is now 68% higher than the previous year. So far, the only significant change we’ve seen was a drop in the average sale price of lofts. But keep in mind, sales prices are a lagging indicator of market conditions and now that the $21.5 billion of 2006 Wall Street ‘bonus buying’ is pretty much over we may see further market changes”.

Building permits that reached a record 8,493 in 2005 have begun to slow as the market adjusts to the changing supply and demand. Permits for the first 5 months of 2006 reached 3,170 a 17% drop from the first 5 months of 2005. As inventory numbers are now edging past absorption equilibrium, the question becomes “can supply be re-positioned in time to avoid a major glut of inventory? And, how will rising interest rates impact demand?” We will be watching the 3rd quarter very carefully for any change in these critical indicators,” added Jackson.

Second Quarter Report Highlights:

Million Dollar Sales Dominate Sales of million dollar plus homes spiked in the 2nd quarter to represent a record 40% of all transactions, compared to 30% the previous quarter and 31% one year ago. The rise offset the corresponding decline in the percentage of sales between $500,000 and $1M which dropped from 48% to 41%.

Downtown Competition Heats Up With the majority of new housing inventory coming available south of 23rd street, sales activity rose to a new high of 33% of all sales compared to 29% the previous quarter with a 10% decline in average sale price to $1,029,000. A large increase in the supply of loft apartments resulted in a 17% drop in average sale price, to $1,488,000 the lowest in 6 quarters. The average sale price in midtown rose 6% to $1,050,000; The West side up 1% to $1,461,000 while the East side dropped 3% to $1,122,000

Condominium Sales Increase to Record High The market share of condominiums grew to finish the 2nd quarter at 41% of all sales, the highest on record up from 32% the previous Quarter.

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