Despite tight inventory of apartments and co-ops in Manhattan, there is little sign of any pickup in prices. Time it takes to sell an apartment drops to five-year low.
The number of condos and co-ops on the market in Manhattan in the third quarter shrank to its lowest level in seven years, according to market reports released Tuesday morning. Inversely, three reports showed that sales activity in the quarter rose to its highest levels since 2008.
In the third quarter, listing inventory tumbled to 5,847 units, down 24.3% from the same period a year ago, according to a report prepared for Prudential Douglas Elliman by Miller Samuel Inc. That figure was the lowest in more than seven years. Similarly, the Corcoran Group reported that inventory fell 22%, to a seven-year low of 7,041 listings. The low inventory coupled with increased sales activity could be volatile down the road, but there’s little sign of that, yet.
“Inventory is tight, and if nothing changes, we are at a point where we may start to see price appreciation,” said Jonathan Miller, CEO of appraisal firm Miller Samuel. Rising rents in Manhattan and low interest rates are also expected to boost prices, experts note.
Most reports painted a picture of a rising number of closings in the third quarter. Corcoran recorded 3,821 sales, a 17% increase from the same time a year ago. While Halstead Property and sister brokerage Brown Harris Stevens put the increase at 12% with 2,790 transactions, the highest number since the third quarter of 2008.
“Sales are happening across all price points in Manhattan,” said Diane Ramirez, president of Halstead. “That is good news. It shows that there is confidence and belief in the market.”
Additionally, the average time it takes to sell a condo or co-op contracted to 5.9 months, its shortest period in five years, down from 7.5 months during the third quarter a year ago, according to Elliman/Miller. The 10-year average absorption rate for Manhattan is 9.4 months.
Despite the dearth of inventory, prices aren’t heading north quite, yet. Median sales price dipped 2.3% to $890,000 during the quarter from the same time last year, according to the Elliman/Miller report. And the good news is, prices aren’t expected to skyrocket as they did in the boom. Dottie Herman, CEO of Elliman, points out that prices are still far from the height of the market, about 12% off from the peak median sales price, which according to Mr. Miller is $1.025 million.
“There is reasonable price sensitivity among buyers, they are concerned about what they pay,” said Hall Willkie, president of Brown Harris Stevens, adding that before the Lehman Brothers collapse, people were willing to pay almost any amount. But of course, the exception on prices would be the über trophy properties, he noted.
The fact that it remains difficult to get a mortgage and lending requirements are strict will also keep prices in check, according to Ms. Herman. “It’s a healthy market,” she said. “I don’t see prices appreciating by 20%, but I do think prices will be higher next year.”