"A Tale of Three Cities"- New York City
Monday, March 19, 2007SUZANNE PRATT: The turmoil in the housing industry has been a major concern of investors, big and small, over the last year. And that concern has grown as the sub-prime mortgage market started its meltdown. So this week we're examining just what's going on in housing markets of some of America's largest communities, in a series we call "A Tale of Three Cities." We begin tonight with a close look at the biggest real estate market in the country, New York City.
This unusual triplex apartment on Manhattan's upper west side has been on the market for about a month. The two bedroom two bath with a rare patio has attracted a lot of interest. Open houses have been well attended. Still, there have been no bids. Homeowner Daria Archer says she's not worried but wonders why it's taking so long.
DARIA ARCHER, HOMEOWNER: Because we love it so much, I don't understand why someone is not walking in here and feeling like they just struck -- like how could there not be someone so quickly.
PRATT: New York apartments may move slower today than they did during the frenzied market of a few years ago. But real estate experts say after a cool 18-month period, Manhattan's market is warming up. Since the New Year, New Yorkers have been combing real estate sections, scouring web sites and flocking to open houses. The burst of activity is happening at all price points, entry level, which means studios or one bedrooms and luxury -- that's over $3 million -- are the most popular. According to real estate appraiser Miller Samuel, more than 1600 contracts for co-ops and condos were signed in the first two months of '07, a 25 percent jump from a year ago. The median sales price is about $800,000 in January and February, up from $700,000 last year. Inventory of unsold apartments dropped by 6 percent in the same time frame. Miller Samuel president Jonathan Miller, says inventory is still elevated although the market is perking up.
JONATHAN MILLER, PRESIDENT, MILLER SAMUEL: I'd say that it's neutral, but still probably almost a buyers' market meaning that we're not in a housing boom here. We're not seeing the robust sort of frenzy that we were seeing a couple of years ago.
PRATT: Real estate experts credit record Wall Street bonuses for the boost in sales and they say the winter-spring season is typically the strongest period in Manhattan. Foreign buyers are also doing their part aided by the weak dollar. On top of that, Prudential Douglas Elliman broker Ann Cutbill Lenane says more families are staying in the city.
ANN CUTBILL LENANE, BROKER, PRUDENTIAL DOUGLAS ELLIMAN: In terms of the strength of our market, it's definitely the financial world absolutely drives our market also because New York is a safer, nicer place to be. It's not the capital of the squeegee capital of the world as it used to be.
PRATT: Lenane describes the market as amazingly buoyant, but says it's not the silly environment of a few years ago when bidding wars meant sales at hundreds of thousands of dollars over the asking price. As a result sellers need to do all they can to make their properties stand out, including staging them. Homeowner Bob Spillane hired stager Mark Schrader to give his two-bedroom home a facelift.
MARK SCHRADER, STAGER: De-clutter all the surfaces and move furniture around, roll up a rug, that kind of thing.
BOB SPILLANE, HOMEOWNER: I'm just looking to sell the apartment. You do whatever you've got to do as long as I have a bed to sleep in, a couch to watch the game on, I'm fine.
PRATT: Spillane's apartment went from this to a new and improved version of its former self, something he hopes will soon mean a million dollar sale. But experts say one factor that could keep the market from booming again is the flood of new development, mostly high-end condominiums. From the tip of lower Manhattan to an enclave of Trump buildings on the upper west side, New York is in the midst of the biggest building wave in 20 years. Some estimate 25,000 new units are coming to market in the next year, a huge number considering 10,000 to 15,000 co-ops, condos and town houses sell in a good year. NYU Professor Nouriel Roubini is worried the glut of supply will lead to sharply lower prices later this year.
NOURIEL ROUBINI, PROFESSOR OF ECONOMICS, NYU: I think that while maybe not as dramatic as, say, in Las Vegas or Phoenix or Miami, the same structural excess applies (INAUDIBLE) is occurring in New York and like everywhere else in the country, that's going to lead to price option downward.
PRATT: One issue that's not expected to be a big factor for the Manhattan market this year is the breakdown of sub-prime lending. Experts say that's because sub-prime loans, mostly involve lower-income home buyers not the typical profile of a New York City home buyer.
KANGAS: Tomorrow "A Tale of Three Cities" continues with a look at the housing boom and bust in the nation's capital.
