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Manhattan's Real Estate Prices Creep Up

By Amy Zimmer | April 3, 2012 9:46am

MANHATTAN — As stability is the new normal for Manhattan’s real estate market, even as prices start picking up, there's still room for negotiation. 

Housing prices remained stable in the first quarter of 2012, just as they have done for the past two and a half years, according to the market report released Tuesday by Prudential Douglas Elliman, which said the median sales price at $775,000 was just 0.9 percent down from the first quarter of last year. The Elliman report found the average sales price was $1.3 million, just 0.8 percent up from the prior year.

Sellers are adjusting their expectations to the flat prices: the listing discount — the spread between asking and sales price — was 6.3 percent, up from 4.5 percent in the same period last year, according to the Elliman report. 

"Sellers are pricing higher but acquiescing to buyers pretty quickly," said Jonathan Miller, a real estate appraiser and author of the Elliman report.  "Sellers are being a little more optimistic in pricing, but not fully committed because prices are stable."

The pace of the market seems to be gaining speed.

According to Streeteasy’s 2012 first quarter report — which found the same median sales price as Elliman — new listings were hitting the market much faster than the previous quarter with an average of 355 listings added every week compared to 268. Apartments were being bought or otherwise taken off the market faster, too, with an average of 386 listings absorbed every week — a 5.4 percent increased compared to the previous quarter.

“We’re expecting a more robust second quarter,” Miller said.

Elliman’s results for this quarter may have been “understated” because the majority of sales — 56.2 percent — were for the smallest and lowest priced apartments: studios and one-bedrooms, Miller noted. This represented the highest market share of these sized apartments since 2009, which Miller dubbed “the year of the first-time home buyer” because of the federal government’s first-time home buyer tax credit.

First-time buyers are being spurred into owning real estate as rents remain high and interest rates remain low, many experts say.  But credit remains tight — which is why so many people are renting.

“Credit has still not eased,” Miller said. “I think credit will remain tight for the next couple of years. People are getting mortgages, but not people on the margins.”

The low rates have been “pushing people off the edge,” said Dottie Herman, president and CEO of Prudential Douglas Elliman. “They say, ‘I might as well get in the game.’”

At the other high end of the market, things have been “off the wall,” Herman added, since many buyers, have seen Manhattan real estate as a safer investment than the stock market because of the low rates.

Brown Harris Stevens’ report found big average sales prices jumps: 9 percent from the year before — attributing it to a 42 percent spike in sales above $10 million. Large apartments saw big price gains.

On the Upper East Side, for instance, apartments with three bedrooms or more saw a 9 percent increase in average price compared to the year before. The Upper West Side saw those sized apartment saw a 52 percent increase in the same time because of the $88 million sale at 15 Central Park West, where BHS represented the buyers and sellers. But even disregarding that sale, the average price was still 22 percent higher than a year ago, the report said.

Overall, Herman anticipates prices to rise a “healthy” 3 to 4 percent in the coming months.

“I don’t see prices going up 20 percent,” she said. “The economy isn’t there yet.”

But even if prices rise, Herman advises many of her clients that now is a good time to jump into the market. Plus, she suggests that buyers can often get prices down 5 to 6 percent.

“People look at the price but not the cost,” she said. “With interest rates low, money is cheap.”