Manhattan Apartment Prices Fall in First Quarter

Prices of existing Manhattan apartments fell by double digits in the first quarter, according to several market reports released Thursday by New York City's biggest real estate brokerages.

The median resale price of an existing Manhattan apartment fell 11 percent to $749,000 in the first quarter, according to a report from PropertyShark.com, a foreclosure data Website and The Corcoran Group, New York City's largest brokerage.

"Prices still have downward pressure on them, and you'll see lower prices in the next quarter than you're seeing now," said Corcoran Chief Executive Pam Liebman.

Of all listings in the quarter, 37 percent, or 5,641, saw price cuts, while prices rose on only 136 properties, according to data from real estate Website StreetEasy.com.

The price declines reflect the ongoing turmoil afflicting Wall Street which started in the summer of 2007 with the first stirrings of the credit crisis and intensified last September with Lehman Brothers' bankruptcy, said Gregory Heym, chief economist of brokerage Brown Harris Stevens.

"Wall Street is the leading economic force in the city, so it's not surprising," Heym said.

Brown Harris Stevens' data had median resale prices down by 16 percent in the first quarter. ob losses and deep cuts in the financial services industry have cooled the normally overheated New York City property market.

In February, New York City's unemployment rate rose 1.2 percentage points to 8.1 percent from January, the highest level since October 2003, the state Department of Labor said last week.

In 2008, Wall Street firms slashed bonuses by 44 percent, cutting the total to $18.4 billion from $32.9 billion, state Comptroller Thomas DiNapoli said in a January report.

The drop in prices indicate more to come, because resale prices are not susceptible to distortion like sales figures that include new construction, in which contracts are signed up to 18 months before the sale is completed. The lag between the signing and closing of a resale contract is much shorter.

In the first quarter, for example, the median sales price for new development rose 26.4 percent compared with last year to $1.28 million, according to StreetEasy.com's data.

But excluding new development, the price correction will continue to unfold in the next Manhattan market report, and maybe even in the one after that, said Matthew Haines, PropertyShark.com's founder: "We are in a period of price discovery." Wall Street's pain also manifests itself in a dramatic decline in sales activity, most vividly seen in an 87 percent year-over-year decline in closings over $10 million, the Brown Harris Stevens Report said.

But volume fell across the board, with the number of sales falling by almost half to 1,195 compared with last year, according to the Prudential Douglas Elliman/Miller Samuel report.

The global credit crisis, which is making it harder to get a mortgage for expensive Manhattan real estate, is also dampening demand, said Corcoran's Liebman, who has high hopes for government efforts to unleash the flow of credit.

"We need to get lending back on track for our buyers, and that will help a lot," she said.

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