Housing recession hits New York as prices drop

Source : Business Times - 9 Oct 2008

Biggest drop in Queens, with median property price sliding 17%

New York City apartment and house prices fell in every borough except Manhattan in the third quarter, according to the Real Estate Board of New York, as the national housing recession came to Brooklyn, Queens, the Bronx and Staten Island.

Queens had the biggest drop, with the median price of apartments and one to three-room family homes falling 17 per cent to US$400,000 in the three months ended Sept 30. In the Bronx, prices declined almost 12 per cent to US$389,000; in Brooklyn, they dropped 11 per cent to US$500,000; and on Staten Island they fell 8.2 per cent to US$390,000.

‘The storm is going to engulf Manhattan,’ said Mark Zandi, chief economist for Moody’s Economy.com. ‘It has held up well to this point for two reasons: one, global investor demand for everything New York; and second, the problems on Wall Street have only now really begun to impact jobs.’

Prices in Manhattan have continued to rise even as sales have dropped and inventory has climbed for the past three quarters. City real estate brokers are bracing for a possible drop in property values after the collapse of three of New York’s five largest investment banks since March.

‘New York City’s residential market is feeling the effects of the national real estate slowdown,’ REBNY president Steven Spinola said in a statement distributed by e-mail. REBNY is a real estate trade group.

New York and six surrounding counties are projected to lose 64,000 financial services jobs by the second quarter of 2010, according to Moody’s Economy.com. In Manhattan, third-quarter apartment transactions fell 24 per cent to 2,654 from a year earlier and the number of apartments on the market increased to 7,003, New York-based real estate appraiser Miller Samuel Inc and broker Prudential Douglas Elliman Real Estate said in an Oct 3 report. The median price of a condominium and co-op jumped 7.4 per cent to US$928,263, the second highest on record, they said.

Falling sales and rising inventory preceded price declines across the US in 2005 through 2007, according to data from the Chicago-based National Association of Realtors.

Two other price gauges of New York real estate show declines for the greater New York City area. The S&P/Case-Shiller home-price index for New York dropped 9.1 per cent and Radar Logic Inc reported that prices per square foot fell 7.8 per cent in July from a year earlier. Both measures include New York’s outer boroughs as well as surrounding suburban counties and exclude data on co-operative apartments, which account for about two-thirds of owner-occupied units in Manhattan.