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Manhattan Apartment Price off in 3rd Quarter Versus 2nd Quarter

What goes up and up must eventually head back to earth -- at least in Manhattan, where the average price of an apartment fell to $1,149,813 in the third quarter -- down 12.7 percent from the second quarter, according to a quarterly real estate report released on Tuesday.,

That was a break from the record prices set in the first two quarters of 2005, according to the Prudential Douglas Elliman Manhattan Market Overview report.

But before champagne corks start popping, real estate investors and home buyers need to take note that the average price of a Manhattan apartment in the third quarter of 2005 was still 10.1 percent higher than in the same period a year ago, according to the report. The quarterly snapshot of Manhattan's real estate market was released following the end of the third quarter on Sept. 30, which was Friday.

Prices per square foot rose 1.4 percent to $984 in the third quarter from $970 in the second quarter -- and jumped 22.5 percent from $803 in the year-ago quarter.

"We're not seeing prices fall," said Jonathan Miller, author of the Prudential Douglas Elliman Manhattan Market Overview report. "What we're seeing is more entry-level sales and a more moderate appreciation of property than we've seen in previous quarters."

Overall, the median sales price for a Manhattan apartment fell to $750,000 in the third quarter, down 3.2 percent from $775,000 in the second quarter, but still up 25 percent from $600,000 in the third quarter of 2004.

Studio and one-bedroom apartment sales drove the Manhattan market during the third quarter, lowering the average and median prices from the second quarter.

SOME SEE A CORRECTION

But has the Manhattan residential market topped out?

"It's anybody's guess," Miller said. "The market this quarter increased, if you look at the prices year over year."

Still, "it's not the sort of double-digit growth we saw over past few quarters," Miller added.

Brokers' opinions mirror the mixed results, with some calling for a price correction and others saying the market is as healthy as ever.

"My sense is the buyers are saying: 'No more. We want a price correction,'" said Jacky Teplitzky, executive vice president of Prudential Douglas Elliman Real Estate, who added that she believes prices should come down by about 10 percent.

"I hear some of the brokers say it's a very spotty market," said Sharon Baum, senior vice president of the Corcoran Group. "I don't really agree with that. It comes down to price."

For the Manhattan apartment market, the number of sales fell 8.4 percent during the third quarter to 1,997 units -- down from 2,181 in the second quarter -- and off nearly 18 percent from 2,429 in the year-ago third quarter.Apartments also hung around the market longer -- lasting 133 days, up 30.4 percent from 102 days in the second quarter and up 23.7 percent from 107 days in 2004's third quarter.

Inventory climbed to 5,764 units in the third quarter -- up 16.1 percent from 4,965 in the second quarter and up 12.8 percent from 5,112 in the year-ago third quarter.

LUXURY APARTMENT MARKET SLOWS

The weakest sales were in the top of the Manhattan market, according to the Prudential Douglas Elliman report. The average sales price of a unit with four or more bedrooms declined about 36 percent in the third quarter to $6,823,346, down from $10,639,792 in the second quarter.

In comparison with a year ago, the third-quarter 2005 price for an apartment with four or more bedrooms was 1.2 percent higher than it was in the same period in 2004.

In the luxury market, which is the top 10 percent of the Manhattan apartment market, the average sales price fell 26 percent to $3,824,079 from $5,166,644 in the second quarter, and it declined about 7 percent from $4,109,152 in the year-ago quarter.

Miller said that top-end buyers -- unlike buyers of one-bedroom and studio apartments -- usually are not under the gun to find somewhere to live. Luxury buyers can rethink their decisions in the wake of the events that recently affected the U.S. economy, he explained.

"There were a lot of distractions this quarter ... hurricanes, spikes in gasoline prices," Miller said. "This market has been the one where you wait and see and sit on the sidelines. There's not much of an immediacy to the purchase."

The supply of luxury apartments also fell in the third quarter so this sector of Manhattan's residential real estate market no longer has sway over the quarterly numbers.

The number of sales in the top 10 percent of the market fell in the third quarter to 200 units, down 8.3 percent from 218 in the second quarter, and down 14.5 percent from 234 in the year-ago quarter.

 

 

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