There are several reports out today from the major real estate brokerages regarding the state of the market during the first quarter. All of the reports show two trends, sales slowing and prices continuing to climb. Even factoring out huge sales at 15 CPW (which skewed average prices higher), more reliable median price numbers also showed healthy increases of 9%-13%. Even as a small broker, I have seen similar trends in our business. March was an unusual month and one in which overall uncertainty was the greatest I've seen since just after 9/11. After all, it's not every day that a major brokerage collapses, the fed takes unprecedented actions over a weekend, etc., etc.. While these events certainly slowed the number of inquiries, we have seen fits and starts of business where for a couple of days at a time you would think we were in 2006 all over again. Now that the stock market has stabilized and there is some sense that the worst may be over in the credit crisis (which is debatable), the real estate market here in the city stands a good chance of having a decent 2nd quarter. One of the most important factors going forward is the rate on a 30 year fixed jumbo mortgage. If there is anything holding our market back outside of Wall Street, it's the higher rate on the jumbo. The jumbo had a low of 6.4% in mid-January but now stands at 7.16%. In light of numerous large rate cuts in the interim, the jumbo rate should be significantly lower, yet banks have built in huge risk premiums and the market for those mortgages is still largely illiquid. That's why we have a higher rate. The jumbo rate would be the one to watch to gauge the health of both the financial system and the prospects for the NY real estate market short term. Were the jumbo rate to move to 6.5% or lower over the next quarter, it's a safe bet that sales in the 2nd quarter will be humming along.
Manhattan Sales Drop By Biggest Margin In 18 Years, Prices Up 13.2% (Bloomberg)
Manhattan Market Cooling, Prices Still Hot (NY Sun)
Atlantic Yards Eminent Domain Case To Go To US Supreme Court (Observer)
Interview With Co-Founder Of Rockrose Development (The Real Deal)
Implications Of Congestion Pricing On Manhattan Rental Market (Observer)