New York (April 2, 2009) – The real estate market of Manhattan has collapsed significantly.
In the first quarter, the sales of newly built housing units plunged 67% and closings dropped 52% than what it was a year ago. In March 2009, inventory went up 29% to 12,336 listings. As per the statement by Propertyshark.com and the Corcoran Group, which is a leading real estate brokerage firm, this was the peak level in over eight years.
Statements that were released on Thursday offer more proofs. Streeteasy.com, a real estate website, mentions that in the first quarter, higher than one-third of listings slashed rates and the average reduction was exceeding 9%. According to Halstead property, the apartments sold at that time remained in the market for 18% more time as compared to the previous year.
Typically, a time lag between contract and closing was noticed that existed for many months.
The city of New York had resisted the extended recession riveting the country for a long time, however that resistance gave way together with Lehman Brothers Incorporated in September 2008. The resultant economic depression has wiped off thousands of high-profile jobs and cut down Wall Street incentives. These losses accompanied by stricter lending prerequisites and the dollar gaining strength have taken out a substantial portion of the global buying pool and stopped price hikes.
New York is an area undergoing changeover where buyers and sellers attempt to decide prices. Some people are anticipating that the area would face chaos like Las Vegas or Miami where the investor-driven markets were buffeted by the depression and swollen foreclosures. At a time when Manhattan underwent a condo boom and those prices are depreciating, resulting in some contracted buyers to attempt to escape agreements – that the area is an island indicates that there could be considerable growth.
As per the National Association of Realtors, Manhattan rates stay well over the countrywide average price that was $165,000 in February 2009. As per Streeteasy.com, in the first quarter, there was a drop of 4.7% in average condo sales in Manhattan to $895,000 and there was a slump of 11.3% in resales of co-ops to $550,000 from a year ago.
Diminishing rates are good news for prospective buyers who have been unable to buy due to high rates for a long time. On the Upper East Side, the asking price for an alcove studio dropped 47.5% to only $199,000. Within only one day, a co-op on Park Avenue experienced a price slash of $1.1 million.
Similar to other markets, declining interest rates and reduced prices are creating demand. According to industry analysts, website traffic, contract operations and open house presence have risen, generating expectations that the slump in New York might be less prominent than other previous bubble regions.