Friday, January 11, 2013

Want to buy an apartment? Well, too bad. There aren't any.

Or at best, very few.  According to a report prepared by Miller Samuel, arguably New York’s foremost appraisal firm,  there are (or were on January 1) exactly 4,749 apartments for sale in Manhattan. 
This is the smallest number Miller Samuel has seen in the twelve years they’ve been preparing the report.

And remember, the 4,749 number includes apartments with brick wall views, sky high maintenances, kitchens with avocado green appliances, or other fatal flaws.  So the supply of apartments that somebody might actually want is even lower. 

The dearth of inventory is at least partly due to the dearth of  funding for new construction and new conversions after the crash of 2008.   There was simply a lot less inventory coming on the market.
The absorption rate is calculated by dividing the number of sales over the last 12 months by 12 to get the average number of sales per month, and dividing that number into the current number of available properties. 
This gives you the number of months it will probably take to sell all the properties currently available.

An absorption rate of more than nine months means it’s a buyers’ market.  Six to nine months is a balanced market.  Less than six months is a sellers’ market.    

The current overall absorption rate, as per Miller Samuel, is a scant 5.5 months.

Does this mean prices are going up?

Sort of.  For condos, “Most price indicators showed year-over-year gains…..Average sales price and average price per square foot increased 5.4% and 0.5%.”   Average sales price for a condo in the fourth quarter was $1,867,516, while the average price per square foot was $1,301. 

Co-op prices also showed gains.  Average sales price for a co-op in the 4th quarter of 2012 was $1,190,430 for a year-over-year gain of 6.9%; average price per square foot was up 0.3% to $939.
(The average unit price for a co-op increased at a higher rate than the average price per square foot simply because larger co-ops--with more square feet--were sold in the 4th quarter of 2012 than in the same period in 2011.)

But because co-ops, with their lower prices, gained a substantial market share, overall price indicators were mixed.  Median sales price for all apartments slipped 2% to $837,500  and average sales price increased a mere 1.1%, to $1,461,473..

Note that the difference in co-op and condo prices does not necessarily mean that co-ops are less desirable per se. 
Because  a large part of the condo market is new conversion or new construction, and comes with a lot of bells and whistles that co-ops do not generally offer ranging from doormen to dog spas, prices for condos are generally higher.

Bottom line, if you need to buy, you don’t have a lot of choice.  But on the other hand, if you want to sell, assuming your apartment is properly priced and marketed, it should be snapped up quickly.


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