Manhattan Housing Market Bucks National Trends

Most major media jumped on the NAR report yesterday of the biggest decline in existing home sales in 17 years.  The first remarkable part of this story is that the NAR is behind the numbers and as most of you know who read this blog, I’m always skeptical of NAR stats. 

The National Association of Realtors said sales of existing, or previously owned, homes fell 0.8% in December from the previous month to a seasonally adjusted annual rate of 6.22 million units. For all of 2006, sales of existing homes totaled 6.48 million. That was down 8.4% from 2005 and was the largest annual decline since 1989, when rising interest rates and relatively high unemployment fueled a housing recession.

But of course you knew the NAR would make every attempt to take the sting out of these numbers:

Even after last year’s sharp drop, 2006 was the third-strongest year for home sales since the NAR began tracking sales in 1968. And prices managed to move slightly higher in 2006; the existing-home median price was up 1.1% to $222,000.

And what will numbers look like in 2007 according to those economists interviewed by WSJ?

For 2007, many economists predict that sales will continue to fall, but at a more modest pace and with most of the decline occurring in the first half of the year. "The biggest drop is probably behind us," said Fannie Mae’s chief economist, David Berson. "But it’s still too soon to say this is unambiguously the bottom."

Surprise, surprise!!!  According to the Journal report, Lereah thinks the fall will be almost non-existent.

Forecasts for 2007 vary widely. David Lereah, NAR’s chief economist, foresees a modest sales decline of 1.2% this year. Mr. Berson expects existing-home sales to drop 7% to 8%.

So what does this all mean for New York City.  Well, based on current market conditions paired with the 4th quarter of 2006, not a damn thing!  I have a big problem with "National" housing numbers that allegedly speak to a non-existent "National Market."  There is no doubt based on my conversations with those in the know that many markets, in fact I would venture to say most, are still in the midst of a correction with some areas experiencing such depreciation that the word "bubble" may indeed be appropriate.  That said, the current Manhattan real estate market has heated up yet again.

Yesterday, I was discussing 2006 market conditions with a colleague for whom I have a great deal of respect.  We and others in my industry concur that June through October 2006 was probably our slowest period over the past 10 years but the moment the media reported the good news regarding Wall Street bonuses, the market picked up steam.  Of course, the stabilization and even fall of mortgage rates paired with more realistic asking prices aided in resuscitating a market that many in the business thought had officially cooled.

Now the chatter in the New York City marketplace is that business is booming again with some appropriately priced properties fetching multiple bids and some even selling above the asking price.  Two weeks ago, I and my team had more than 60 people attend an open house and we received multiple offers over the asking price on a property that had been on the market for 3 months.  Much of the property that I and my colleagues have had on the market since October has been snatched up at incredible prices over just the past couple of weeks.   I’m hearing similar reports from many of my colleagues.  The common element to all of these transactions seems to be a reasonable asking price.

I’m curious to hear from buyers, sellers, and real estate industry experts across the country to get a feel for whether or not Manhattan is truly an anomaly or are others out there having similar experiences?

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