The price to buy a slice of the Big Apple slipped in the fourth quarter. But a resilient economy puts it on track for future gains.
"New York City's recovery remains well ahead of schedule," said Hall Willkie, president of residential sales at property brokerage Brown Harris Stevens.
"Its economy is doing much better than the national economy," Willkie said. "This combined with a relatively low rate of available apartments has led the Manhattan market to continue to outperform the rest of the nation.
The data coming in on Manhattan's fourth quarter are mixed.
A report out Wednesday from the Real Estate Board of New York shows the average price of a Manhattan dwelling down 11% from a year ago. But a report from Brown Harris Stevens shows the average Manhattan apartment selling price down just 3% to $1.391 million.
"They might pick up some sales we don't have," said REBNY spokesman Brian Klimas, noting that Brown Harris bases its data on closing dates, while REBNY uses dates that sales are recorded with the city.
Klimas concurs on economics: After the housing bust, the residential real estate market's recovery "happened quicker" in Manhattan than in the rest of the country. But after a fast snap back, it is returning to "seasonal trends of the past and a more normalized market.
The REBNY report said average selling prices for New York City as a whole declined 6% and the number of sales fell 12%. The decline in volume "can largely be attributed to seasonal trends, with fewer consumers looking to buy homes in the fourth quarter," the report said.
Desirable areas nearby, such as Connecticut's Fairfield County, are also seeing prices and sales slip.
The National Association of Realtors estimates that U.S. existing-home sales rose 1.7% in 2011. The median price fell 3.5% year over year in November to $164,200.
Condo Sales Slide Willkie says a leading factor in the lower price in Manhattan was a big drop in sales of condos. They typically cost more than co-ops, which have different ownership rules.
Condos accounted for 40% of all sales vs. 46% a year earlier in the Brown Harris report. The average condo price rose 4% to $1.825 million, while co-ops stayed on par with a year earlier at $1.149 million.
Willkie says the drop in condo sales may have had to do with the lower inventory of condos available. There's been a lack of new condo development since the Lehman Bros. collapse. And Willkie notes "there was a real crisis of confidence" last summer with the debt crisis in Europe, which affected the Manhattan market.
The number of closings slipped 13% in the fourth quarter from a year ago, to 1,645. Willkie says a key factor in the decline was the threatened expiration of President Bush's tax cuts, which led many high-end owners to sell before 2010 ended.
Helped by three large closings over $20 million, the average price for co-ops with three or more bedrooms jumped 18% from a year ago.
Properties selling for $7 million or more comprise the high end of the market, which is doing better than the midmarket to lower end, priced at $1 million or less, says Gregory Heym, chief economist at Terra Holdings, which owns Brown Harris Stevens and Halstead Property.
Manhattan is not prone to the big swings of other real estate markets. The borough "is not a speculators' market," Heym said. "Most people here buy to live here.
A diverse economy has helped Manhattan's recovery, he adds, and tourism has been booming while a good number of jobs lost in the recession have returned.
"That's helped keep our residential real estate markets strong," Heym said.
"Our highs are typically higher than anywhere else, and our lows are not as low as other places," said Gary Malin, president of Citi Habitats, a Manhattan real estate brokerage. "We have an ability to rebound quicker than other parts of the country.
Following a six-month slump after the Lehman Bros. collapse of 2008, Manhattan apartment prices began to recover in the second quarter of 2009.
"Once things started to pick up we started to see a slow climb up in average prices," Heym said, adding that there has been a "little" quarter-to-quarter fluctuation amid seasonal changes, but not much year-over-year decline.
Property Brokerages Profit 2011 was a "good year" in sales for Brown Harris Stevens, says Willkie, estimating volume was off 8% from the year before. He calls 2010 Brown Harris Stevens' "most successful year ever" in sales volume.
"We had a very strong year in 2011 in terms of number of sales and dollar value of sales," said Frederick Wohlfarth, president of Manhattan-based real estate brokerage Wohlfarth & Associates.
He said the last quarter was "exceptionally strong," with a lot of deals in contract, a "fair amount" of which are with foreign buyers; 33% to 40% of condo purchases over the past year have been to buyers from countries such as China, Russia and Brazil, Wohlfarth estimates.
Most co-op buyers have been people trading up to larger spaces, say from a two-bedroom apartment to a three-bedroom space. Wohlfarth has seen only "some" foreigners buying co-ops.
Heym says co-ops account for two-thirds of housing owned in Manhattan. Their rules limit subletting.
Beyond The Boroughs The REBNY report noted "significant gains" in condo value in Brooklyn and Queens, with the average sales price in Brooklyn up 11% from a year ago in the fourth quarter.
In Fairfield County, Connecticut, towns such as Stamford, Westport, Norwalk and Greenwich had lower sales volume in the fourth quarter of 2011 than a year ago, Heym adds.
Spots like Greenwich and Darien depend on Wall Street for buyers and, as smaller markets, are more volatile. Plus, while Manhattan employment has improved, all the Wall Street jobs lost after Lehman Bros.' collapse have not returned.
Halstead Property's fourth-quarter report shows Greenwich sales fell 19% vs. a year ago and the median price 3%.
Activity is "picking up" in Fairfield County and Westchester County, N.Y., Wohlfarth said, but not "in any way as strong" as in Manhattan.
Brokers expect a first-quarter pickup in New York City sales activity, according to REBNY's report.
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