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2008 Fourth Quarter and Year End Review - Average Price of a Manhattan Apartment
Declines 11.5% in Value, the Market Re-Calibrates
By Jeffrey Jackson
Published January 29, 2008
NEW YORK, NY - January 29, 2009 - Mitchell, Maxwell & Jackson, Inc. (MMJ)
the unprecedented events of the past year, and especially those of the last
few months, have resulted in a dramatic slowdown in real estate sales. The Manhattan
housing market saw the average price of an apartment decline 11.5 % from the
first quarter -08. Retreating values are now clearly broad based and affecting
all neighborhoods, price points and property types. We have examined the data
and broken it down into two sets. Firstly, the clos ed sales and secondly, the
current pending deals and listings. These are our findings based on the closed
sales data as reported by The Real Estate Board of New York (REBNY):
- Market conditions have been weakening since the sub-prime crisis began in
the summer of 2007. Effects were generally contained to the tertiary sectors
of the market until 2008.
- In March '08, the weakness expanded into the broader markets. Lenders tightened
their underwriting criteria and demand for apartments slackened.
- Average apartment price is down 11.5% since 1Q08. The 4Q08 average was $1,372,000
versus $1,552,000 for 1Q08.
- There were 4,019 closed apartment sales in the first quarter of '08 and 2,223
in the 4th
quarter, down 44.7% This figure is also down 35% from the 4Q07 level of 3,423
units.
- The median price of a Manhattan apartment peaked at $920,000 in the second
quarter and fell by a whopping 17.8% to $757,000 in the fourth quarter.
The current data, pending trades and listings, are the best real time indicators;
however they are much more difficult to track. MMJ has amassed a statistically
significant sample (over 350 contracts since September 1) from which we are
able to draw the following conclusions:
- Market conditions have deteriorated further. Sales volume (contracts) during
the ourth quarter
08 was off by approximately 75% versus same period 2007.
- Numerous deals negotiated pre-September have been re-traded and at lower
levels
- Inventory levels are ballooning as absorption of new developments drops off
- Job losses in the financial services sector are widespread (estimated at
140,000 for 2008) and expected to continue
- Rental rates are also declining
- Overall Demand for housing is declining
In conclusion, the most current data indicate that prices have declined 15-20%
from their peaks. These trends are likely to continue as contracted units close
and the data becomes publicly available. Additionally, current trades are now
occurring at levels equal to 2005 and buyers are in control.
About MMJ & the Market Measure: Mitchell Maxwell & Jackson, Inc. is
New York's largest residential real estate appraisal company. The Market Measure
reports periodic sales activity of specific property types within established
geographic parameters of New York City. With New York's largest residential
sales database, the report shows changes in the market by size, location and
price range. Quarterly and additional reports can be found on the company website
at www.mmja.com.
