But will they accept offers 25% less than it’s “worth”?

NYC co-op sales collapse. We’ve been reporting on this for months but for the benefit of those Greenwich residents who don’t believe something’s happening if it isn’t reported in The New York Times, feast your eyes.

Apartment prices have once more become the talk of the town in Manhattan, but this time the talk is of uncertainty and falling numbers. While brokers say they are seeing more activity lately, especially from first-time buyers taking advantage of lower interest rates, housing analysts are predicting a prolonged slump in prices and sales that could last as long as four or five years.

In this year’s first quarter, sales of co-ops and condominiums in Manhattan plunged nearly 60 percent from the first quarter of 2008. Average co-op prices fell as much as 24 percent in the same period, according to various market reports released last week.

Condo prices have held up so far, but only because buyers who went into contract long before the downturn were closing on newly completed condominium buildings. But now few new contracts are being signed on unfinished condominiums, and some buyers have been renegotiating contracts or are trying to back out of them. Co-ops and condos make up 98 percent of the residential properties for sale in Manhattan.

The stress is most severe at the high end of the market. There are 350 apartments and town houses for sale in Manhattan with asking prices of more than $10 million, and inventory has been growing. It would take about six years at the current sales rate to absorb all those listings.

“For the last three years, it was the bigger the better,” said Dolly Lenz, a broker at Prudential Douglas Elliman. “Now the key words are smaller, livable and affordable. Before no one asked what the maintenance was. Now everyone wants to know.”

Manhattan was spared some of the housing problems the rest of the country faced during this downturn. The mortgage foreclosure rate in Manhattan remains low even today. While thousands of condos were built here, most were bought by homeowners, not speculators, as was common in Miami and other oversaturated markets.

But Manhattan housing prices were driven higher by record earnings and bonuses on Wall Street, and they fell hard when the music stopped last fall.

Bad news for Noel, Madoff children

Manhattan co-op prices drop 22%, volume down 48%. Just when these poor kids need every dime they have to pay lawyers fees, fines and disgruntled victims, here comes the mean old real estate market to drive them further underwater. Jesus weeps.

This sounds familiar

I blame bloggers!  NYC brokers start admitting reality – the real estate market has tanked.

THE incredible shrinking real estate market has arrived right here inManhattan, and now that the first quarter is over, not even the most ebullient broker will be able to dispute it. Now everyone will have no choice but to adjust to a market where buyers aren’t buying and sellers aren’t selling, new developments have stalled and mortgages remain scarce.

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Tina Fineberg for The New York Times

The evidence of this decline is likely to arrive later this week when a series of market reports are released, documenting in detail the decline in sales in every type of apartment in every neighborhood.

Last year, the Manhattan real estate market was an $18 billion business. So far this year, sales are off more than 60 percent, according to a preliminary review of first-quarter figures. That is steeper than the year-to-year decline in auto sales in February in the United States.

The drop-off in activity, especially among the most expensive apartments favored by the barons of Wall Street, led to steep drops in city real estate transfer taxes, forced brokerage firms to close offices, led to soaring inventory and left buyers and sellers uncertain about how to proceed.

For now, it seems, the market will be left to people who really need to move and who really need to buy. “If you are going to be there long term, and you need a place to live, go for it — if your time horizon is five or more years,” said Dolly Lenz, a broker at Prudential Douglas Elliman.

Right now, she said, there is a standoff in the market, with buyers expecting huge discounts and sellers resisting. “The buyers and sellers have gotten different memos of what the price should be and no one is budging,” she said.

Michelle Kleier of Gumley Haft Kleier said her firm was still making sales, but of smaller apartments at lower prices than she was used to, typically to first-time home buyers and parents buying apartments for their children.

In the 1980s, a glut of unsold Manhattan apartments in failed projects undermined the market for years. No one knows whether this will be the pattern this time around or whether the market will rebound more quickly if the economy, the stock market and the banks bounce back later this year.

 

NYC prices falling

So says the New York Times and who are we to disagree? 25% down so far, 40% total drop predicted by some. The article’s fun because, as everywhere, they found realtors to deny that there was anything going on.

Looking ahead, however, some believe it is possible that the average slide from peak values could reach 40 percent by the end of 2010, with variation by neighborhood and market segment. That would put values back to levels last seen around 2002.

Others are more optimistic. “I’m not disagreeing with you that values are coming down,” said Pamela Liebman, the president of the Corcoran Group. But, she said, “there’s no way the Manhattan market is dropping to those levels that are being talked about. Certain apartments might, but as a whole it will not happen.”

Hall F. Willkie, the president of Brown Harris Stevens, said he, too, would be surprised by a decline that large.

“A lot of negative things would have to happen in the general economy,” he said. He is seeing sales prices 15 to 25 percent below those of last summer, with renters making up an ever-increasing percentage of buyers. And he saw a positive sign in the fact that, despite all of the bad economic news, sales volume is about half what it was this time last year.

Jonathan J. Miller, the president of Miller Samuel, a Manhattan research and appraisal company, estimates that contract prices have declined by about 25 percent since last summer.

Just how much further prices will dive may depend more on how soon and how generously banks resume lending than on the recovery of Wall Street or the end of the recession.

Ms. Herman said she expected the brunt of the pain to be borne within the next six months. Others expected the downward drift to last for a year to 18 months, until credit markets regain their equilibrium.

When will we know when the market has reached the bottom?

Frederick Peters, the president of Warburg Realty, noted that some deals his firm had brokered lately were nearing the lows being predicted by others. “Even if the New York market were to end up being 35 to 45 percent down,” he said, “to the degree we’re seeing deals done at 30 to 32 percent down anyway, it’s not very far away.”

Mr. Miller says sales activity needs to stabilize first. “You’re approaching bottom when you start to see sales activity stop declining and level off,” he said. “Pricing begins to push up when you have an extended period, like a year, when sales activity doesn’t decline anymore.”

One measure of just how anorectic sales have become is the bloated state of inventory.

 

NYC bloggers ruin real estate market

Stung by news that real estate prices are dropping, NYC buyers are walking away from six-figure deposits. “It’s not true,” New York realtor Mortimer Duke wailed, “it’s just not true. Turn those machines back on! Turn them on!”

More on Manhattan Real Estate and the coming implosion

And all with n’ary a mention in this blog! 

The commentators seem to share the sentiments of many of this blog’s readers, though.

Will NYC drag down Greenwich?

Barron’s thinks NYC luxury homes will drop another 50%. They got hit later than Greenwich did but Greenwich got hit after much of the rest of the country. Greenwich and New York have a ways to go still. If New Yorkers don’t feel rich, they may not buy weekend homes here in Greenwich. Worse, if they have to sell their city property to buy a primary residence here and they get only half of what their property was worth a year ago, guess what will happen to their concept of what’s affordable housing out here among the deer ticks? Ouch.

UPDATE: Or maybe 60%.

Condo foreclosures – bad news for neighbors

The NYTimes reports on condominium foreclosures in NYC, a rare but increasing phenomenon as jobs are lost. In New York, banks take priority over condominium association liens so unpaid common charges will probably never be paid. I don’t remember my Common Interest Ownership Act law these days but back when it was first enacted in Connecticut it gave first priority to association liens. Assuming that’s still the case, you don’t have to worry so much about your neighbor going under. But the article is interesting both for its general subject matter and for its report on the state of the real estate market in New York because, sadly, what happens in New York doesn’t stay in New York; it travels out to the burbs:

We’re seeing more, especially in the higher-end buildings where you never heard of foreclosures,” said Adam D. Finkelstein, a real estate lawyer with Kagan Lubic Lepper Lewis Gold & Colbert in Manhattan. Starting last quarter, his firm began filing two or three liens a month, up from two or three per year.

While the aggregate number of liens is still small (47 in Brooklyn and 67 in Manhattan in December, for example), they may be the first sign of trouble: Liens typically lag months behind defaults in common charge payments, and the bottom didn’t truly fall out of the city’s economy until last fall.

Moreover, barring a swift economic renaissance, lawyers, managing agents and condo boards are bracing for things to worsen significantly this year as job losses mount, severances and savings evaporate, and the new reality sets in.

“The world as we’ve been living in it for the last several years has changed seemingly overnight,” Mr. Finkelstein said. “We’re at the very beginning of this.”

New York City home prices fell 10% last quarter

Manhattan co-op prices actually rose quite a bit, even though volume was down 35% but, as discussed here last week, NT realtors universally see that as a phenomenon that has ended and is now reversing – NYC’s just beginning to experience what the rest of the country has already gone through.

One note of interest: the Bloomberg story I link to attributes this decline to the loss of Wall Street jobs. Had you heard anything about that? Gosh, that might have implications for Greenwich!