- The Washington Times - Thursday, April 2, 2009

NEW YORK (AP) - The recession has hammered confidence in the Manhattan real estate market, with first quarter sales falling to their lowest number in decades, experts said.

Three reports released Thursday estimated a plunge in sales of Manhattan apartments between 47.6 percent and 60 percent, although some real estate firms reported median sale prices rose slightly.

“It’s the largest I’ve ever seen,” said Jonathan Miller, president of the Miller Samuel Inc. consulting firm, which has tracked similar data for 20 years.

“It’s a breathtaking drop compared to what we’ve seen in the last five years,” said Matthew Haines, chairman of PropertyShark.com, a real estate Web site.

The analysts said sellers aren’t adapting quickly enough to a market that collapsed after Lehman Brothers’ bankruptcy and the meltdown of the financial system last fall.

Buyers, particularly Wall Streeters in the luxury apartment market, don’t have the confidence or the wherewithal to take advantage of dropping prices, they said.

“The sellers just didn’t get it,” said Pam Liebman, CEO of The Corcoran Group. “The buyers weren’t willing to play ball at what they perceived were old prices.”

Corcoran’s analysis found a 60 percent drop in apartment sales in the first quarter of the year compared to the same period a year ago, falling to just over 1,500 transactions.

Median apartment sale prices fell 2 percent during the same period to $925,000. Without sales in newer developments, median prices fell 11 percent to $749,000.

Miller Samuel said sales fell off 47.6 percent, although median prices rose about 3 percent to $975,000. Miller said that luxury sales negotiated before the meltdown and a greater number of three- and four-bedroom sales skewed that price upward. Half of the 25 apartments that sold for over $10 million this quarter were in the premium condo tower 15 Central Park West, he said.

A separate report by Brown Harris Stevens Inc. found a 58 percent dropoff in first-quarter sales from the same period a year ago. Median sales rose 6 percent to $907,500.

Tentative buyers took more time to decide on new homes; Brown Harris said apartments spent 106 days on the market before selling during the first quarter, 18 percent longer than a year ago. Miller Samuel’s report said apartments stayed on the market an average 170 days, the highest level in a decade.

Even with little hope of a quick economic turnaround, analysts still looked with some optimism to the second quarter, traditionally the busiest of the year for Manhattan sales.

The likely difference will be the dominance of first-time buyers who can afford to transition from rentals, they said.

The high-end market is likely to have tougher challenges, especially as some of the wealthiest New Yorkers lose jobs in the financial services industries, they said.

“This market has gone from being all about luxury to being all about value,” Liebman said. “There are a lot of buyers waiting on the sidelines.”

The biggest question mark remained in high-end sales, defined as the upper 10 percent of sales prices. If laid-off workers need to unload apartments quickly, prices for multimillion-dollar condos could fall, they said. But even then buyers could be hard to find.

Gregory Heym, Brown Harris Stevens’ chief economist, said sales of over $10 million fell 87 percent in the quarter. Most of those deals were likely negotiated before last September, meaning a steeper fall is possible.

“It’s from a different time,” said Heym, “or from a different economy, I should say.”

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