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Apartment Mark Up Over 3 Q
The Manhattan apartment market seemed to fare better in November than it had during the third quarter, with studio and one-bedrooms the most active segment, brokers and appraisers said.
Jonathan Miller, president of the appraisal firm Miller Samuel and author of the Douglas Elliman Manhattan Market Overview, said the market appeared to "kick back on" to a degree in mid-October, around two weeks before the election. "The sales volume each month declined throughout the third quarter, but in October it picked up and November seemed to be more of the same," Miller said in late November.
Lower-end apartment sales continued to dominate the market, a continuation of a trend seen in the third quarter, when studio and one-bedroom units made up 54 percent of all the apartments sold, a rise from 49 percent the quarter before, according to Miller. "That segment saw its large market share continue," he said. "It was still fueled by concern from buyers that interest rates will rise."
Firms had somewhat different takes on the overall market, depending on the market segments they target. Frederick Peters, president of Warburg Realty Partnership, whose brokerage "doesn't do a huge amount of business in smaller apartments" said the market "was not bad" but that there was "very little frenzy." "Before the election, everyone was saying we have to wait until after the election," said Peters. "Now, they are saying we have to wait and see how bonuses are." "People are making deliberate choices," he added. "Buyers are out there because they have to make lifestyle choices," such as needing extra space for a new child.
A new report by Warburg, which analyzes customer demographics, found that 31 percent of buyers stated more space as the reason for moving during the third quarter. At the mid-year mark, owning instead of renting was the primary reason for purchasing.
Miller cited a spate of $10-million-plus sales recently, but said the high-end market was "not robust, but healthy, or active." Andy Kim, director of sales at Nest Seekers, which does a greater percentage of its sales in the studio and one-bedroom market, was "surprised with the activity in November." "We noticed a pickup in activity since the election," he said. "There were a lot of people searching in August and September, but people weren't as decisive. Now, a lot of people are making a decision. Everybody is anticipating that the rates are going to go up."
Overall, Miller said he anticipates possible 3 percent growth in prices for the fourth quarter, compared to the 2.1 percent price increase seen during the third quarter, and the 10.5 percent price increase seen during the market frenzy during the first quarter of 2004. Inventory remains low, with levels unchanged from September and October, Miller said.
Peters said inventory is "terrible." He said his firm's exclusives "are probably as low as they have been in the last 24 months." Kim said the pool of inventory is "dry".
Miller said he expects to see "higher mortgage rates over the next six to 12 months, but it will be rather modest. I would guess somewhere in the mid-6s. Even if it goes up, it will still be historically low." "I don't see the market catering and I don't foresee frenzy," said Peters.
Wall Street bonuses, which could help give the market a boost next year, might be a mixed bag. "From what I hear, the bonus situation on Wall Street will be very variable according to different departments," said Peters.
The rental market, meanwhile, continues to be tight, even though it is not as hot as it was this summer, which was the first sustained upturn in the market since the dot-com bust, said Bruno Ricciotti, a principal at Bond New York. "Rents are higher than last November, but down since the summer," he said. "There are less incentives from owners [such as paying brokers commission instead of the renter, or free rent] compared to last year. The incentive market really evaporated this summer."