The Manhattan real estate market went out with a bang in 2012, with the number of sales rising by as much as 40 percent in the last three months of the year — mainly because sellers were in a hurry to close deals before new tax laws kicked in with the new year.
At the same time, inventory across the board has continued to fall, leading those in the industry to predict that the scarcity of apartments will bring higher prices in 2013.
“The consensus is prices are going up,” said Pamela Liebman, chief executive of the Corcoran Group, which reported available listings down 16 percent in the fourth quarter of 2012 to 6,514 — a seven-year low.
Corcoran’s report also said sales volume was up 20 percent in the fourth quarter, to 3,200 closings, compared with the same period a year ago, and the median price rose 8 percent, to $827,000. While the rise in prices is good news for sellers, Ms. Liebman said, for buyers, “it’s a very frustrating market.”
And there is little relief in sight.
“Product has dried up, there’s not much available and I don’t see a sudden surge of properties coming onto the market,” said Dottie Herman, the chief executive of Douglas Elliman, which showed in its report that listing inventory fell to 4,749 apartments in the fourth quarter — the lowest level in 12 years. Depending on the location, she estimated prices could rise “anywhere from 5 to 10 percent” in 2013 because of the lack of inventory.
Despite the scarcity of apartments, however, fourth-quarter sales were robust. Rushing to close deals in anticipation of changes to tax laws, wealthy buyers helped push the total number of sales to 2,297 — 40 percent higher than in the fourth quarter of 2011, according to reports by Brown Harris Stevens and Halstead Property. The sharp increase in luxury sales bumped the median apartment price up 6 percent to $836,000 compared with the same period a year ago. The number of sales over $10 million rose 44 percent, to 23, from 16 a year ago.
“All the managing agents in town were just inundated with pressure to close,” said Hall F. Willkie, the president of Brown Harris Stevens Residential Sales. “Without the tax law changes, a lot of that would have gone on into January or February.”
Though the end-of-the-year frenzy caused sales to pick up, prices have yet to reach pre-recession highs.
“If we’re looking at average or median prices, you’re still about 6 to 7 percent below where you were, over all,” said Gregory J. Heym, the chief economist for Halstead Property and Brown Harris Stevens.
Still, brokers are optimistic. Corcoran said a wide majority of its Manhattan agents indicated in a recent survey that for the first time since 2009, they felt the market was “strong” as opposed to merely “stable.”
“It’s now been three years since the recession and each year you see it building with all positive signs,” said Diane M. Ramirez, president of Halstead Property, citing historically low interest rates and pent-up demand. “Customer confidence is coming back. The buyers are motivated. The builders — their confidence is definitely back. I’m very optimistic.”
But despite anticipated price increases in 2013, some analysts say the lift will not signal a real recovery.
In a summary of implications for 2013, Sofia Song, vice president of research at StreetEasy and author of the company’s market report said: “In a healthy market, inventory would be low because of high demand. Buyers from all segments, not just the entry-level and luxury, would be clamoring to take advantage of the record-low mortgage rates. But instead, sellers are slow to enter the market and midsegment buyers are feeling trapped.”
Douglas Elliman said fourth-quarter sales volume was the highest in at least 25 years, but its price indicators were mixed as luxury sales outpaced the overall market and the price of condominiums was relatively stable. Over all, the report showed a 2 percent drop in the median sales price to $837,500.
“Basically the market is flat,” said Jonathan J. Miller, the president of the appraisal firm Miller Samuel and the author of Douglas Elliman’s report. With credit expected to remain tight and inventory expected to remain low, he said, “the market we’re going into is going to be this artificially induced improving market.”