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Sales Gains May Ease

Manhattan market reports show strong sales in the final three months of 2012, winding up very strong year for sales. But price pressure remained subdued, leaving some analysts worrying about softness in 2013, especially for smaller, lower-priced apartments.

During the fourth quarter—usually a slow season—sales soared by 40% compared with the year-earlier quarter, according to a new market report by Brown Harris Stevens, with a rush of expensive deals. It noted wealthy sellers looking to close deals before federal tax increases took hold in 2013.

The number of apartments on the market fell to its lowest levels in the 12 years of listing inventory tracked by Jonathan Miller, an appraiser and president of Miller Samuel Inc. who prepared a separate report for Douglas Elliman. There were 23 sales recorded for more than $10 million in the fourth quarter, compared with 16 during the same 2011 quarter, according to a new report by Halstead Property.

That tally didn’t include a big deal filed with the City Department of Finance on Wednesday: The purchase of a full-floor apartment in December by Marc Rowan, a founder and director of Apollo Global Management, for $26 million at 927 Fifth Ave.

Hall F. Willkie, the president of Brown Harris Stevens, said that while the market was “still price sensitive,” the very high number of high-end sales in 2012 leads him to believe that sales will remain strong in the coming year.

“The market is good,” he said. “The only things that don’t sell are things that are overpriced.”

Pamela Liebman, president of Corcoran Group, said that most of the firm’s brokers “characterized the market as strong,” a first for the survey since it began in 2009 at the bottom of the real-estate bust. With the inventory of listings so low, she said pressure was building on buyers. “The sentiment is that prices are going up,” she said.

But a number of analysts raised some cautionary flags. Sofia Song, director of research for StreetEasy.com, said inventory was falling in part because some potential sellers who bought during the boom years are unable to trade up to larger apartments and aren’t listing units.

She found that the biggest declines in inventories since 2011 were in lower-priced studios and one-bedrooms apartment, which fell 17.2% since 2011, rather than larger apartments.

She noted payroll taxes are due to increase by two percentage points in 2013, cutting into buyers’ purchasing power. Pressure for renters to buy instead also is easing because rents have stopped rising in recent months and begun to drift lower.

Mr. Miller said he thought low interest rates and the tight supply of apartments in Manhattan, were likely to push prices somewhat higher next year, but didn’t mean the market was recovering.

“It is not a sign of a healthy market,” he said. “It is a recovery based on artificial conditions.”

Mr. Miller’s report showed median prices were off 2% in the latest quarter from the year-earlier period, and were down 5.9% from the third quarter of 2012. Average prices were up slightly compared to both earlier periods.

He put the median price of a Manhattan apartment at $837,500 and the average sale price at $1.46 million. The median sale price for a co-op was $650,000 and $1.16 million for a condominium.

A 1917 limestone building near East 74th Street, 927 Fifth Ave. became well known in recent years as the home to Pale Male, a red-tailed hawk that has long nested on the building’s ornamental stonework.

Mr. Rowan already lives on the sixth floor in the building. Last April, he and his wife Carolyn paid $7.7 million for a maisonette with a separate entrance that had previously been used as medical offices. They began renovating the space, brokers said, into additional living space. They also purchased a staff room in the same building in 2005, property records show.