"Tale of Five Cities"-Manhattan, NY
Tuesday, May 06, 2008PAUL KANGAS: President Bush is threatening to veto a bill that would send grants and loans to state governments to buy foreclosed homes. The measure is part of a broader housing bill expected to come to a vote on the House floor tomorrow. All this week, we're looking at the state of the nation's housing market. Tonight, we head to the big apple. Manhattan, unlike the city's other boroughs, has been insulated from the sub-prime mortgage crisis. But as Suzanne Pratt reports in tonight's "Tale of Five Cities," Manhattan hasn't been immune to falling home prices.
SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: Manhattan resident Avery Kotler has been trying to sell his one-bedroom apartment for two months. That's so he and his wife can move to a new house they have already found in Brooklyn. Their upper west side space was first listed for $725,000 but after no offers, Kotler recently dropped the price to $699,000.
AVERY KOTLER, SELLER: Sometimes you have an apartment on a great block and people love it and maybe over the last few years you are conditioned to thinking it will sell and you'll have a bidding war. That's definitely not happening. But all the smart people are telling me that things move with a little bit of patience.
PRATT: For Kotler, those smart people include real estate broker Jill Sloane. She sold the apartment to him four years ago for $340,000 and she thinks it's priced spot-on for the current market. Understanding the state of Manhattan market has become a tall order. Until late last year, Manhattan was an anomaly, one of the few sweet spots in an otherwise souring U.S. housing market. But in the last few months, there are finally signs of softening in Manhattan. The big question is by how much and the answer depends on who you ask. JILL SLOANE, ASSOCIATE BROKER, HALSTEAD PROPERTY: Things that are priced accurately are selling. I'm finding that for my exclusives, they are staying a little bit longer on the market, but I am getting close to the asking price.
PRATT: Halstead is one of the city's premier real estate agencies and President Diane Ramirez says by the firm's calculations, first quarter sales dropped about 1 percent from the same period last year.
DIANE RAMIREZ, PRESIDENT, HALSTEAD PROPERTY: When the credit crisis occurred, we thought we were not going to have a concern with it because we're not a sub-prime market. It's when it started to impact Wall Street where we realized we were not going to get out of this completely.
PRATT: Appraiser Jonathan Miller is well known for taking the pulse of Manhattan real estate and his latest assessment suggests the market may be losing its footing. According to his numbers, first quarter sales were down 34 percent. While that drop appears steep, Miller says it looks worse than it is because last year's sales activity was extremely strong.
JONATHAN MILLER, PRES. & CEO, MILLER SAMUEL: The New York market, relative to other metro areas across the country, has continued to grow far longer than other markets. And the key reasons for that has been, one of the key economic engines here has been the financial services sector, Wall Street. And Wall Street bonuses have been at or near record levels for the last five years.
PRATT: Another reason New York real estate has held up well is the large number or foreign buyers looking to capitalize on the weak dollar. In addition, more families are opting to stay in the city rather than seeking big houses in the burbs. One metric that underscores the health of Manhattan's market is prices, which hit record highs in the first quarter. The median sales price of a Manhattan apartment was $945,000, up 13 percent from the year before. That's partly because high-end condo developments like the new plaza and 15 Central Park West are selling for sky-high price tags. This 10-room Fifth Avenue listing complete with central park views is on the market for nearly $10 million and has had a steady stream of showings. The same is true for this newly renovated Greenwich Village four-bedroom which is currently offered at $6.5 million. Agents predict the luxury end of the market will continue to do well this year.
RAMIREZ: High end has held up beautifully and particularly because it doesn't really need the mortgage market. So that's not impacted by whether you can get a mortgage or not.
PRATT: Surprisingly, there has only been a modest increase in total market inventory, but some brokers are concerned about the growing supply of two- bedroom apartments. They believe that segment will be the weakest if New York real estate slides into recession. Still, most agree New York is in good shape to weather the nation's housing storm.
MILLER: I think we're in a better position than many markets across the country because we don't have the inventory overhang going into this recession, if you agree that we're in a recession right now. However, we're looking at -- I think I'm more concerned about 2009 than I am about 2008.
PRATT: Experts are concerned about next year because Wall Street bonuses are expected to drop and there could also be layoffs. Financial services account for about 5 percent of the jobs in New York City, but about a quarter of the wages. That makes Manhattan real estate strongly tied to the fortunes of Wall Street. Suzanne Pratt, NIGHTLY BUSINESS REPORT, New York.
