NEW YORK - Home prices in Manhattan fell in the double digits in the fourth quarter, but the markdown pushed buyers into the market, according to several reports released on Tuesday by New York City's biggest brokerages.
Manhattan's median apartment price fell between 10 percent and 15 percent from the same period last year, reports by Prudential Douglas Elliman, the Corcoran Group, Brown Harris Stevens and StreetEasy.com show. Elliman put the fourth quarter's median sales price at $810,000; Corcoran at $795,000.
But data also shows price drops moderating and even reversing between the third and fourth quarters amid a spike in sales activity.
I believe we have hit bottom, said Hall Willkie, president of residential sales for Brown Harris Stevens. Certainly, I didn't think a year ago we would be where we are today.
Prices have fallen 20 percent from their pre-Lehman peak, enough to lure those buyers who survived the financial upheaval back into the real estate market, said Dottie Herman, Elliman's CEO.
Buyers realized that, if they kept sitting on the fence, all they'd get is splinters, said Pam Liebman, chief executive of Corcoran.
While Elliman and Corcoran have the median price down about 4 percent quarter-over-quarter, Brown Harris Stevens and StreetEasy.com report median price increases of about 2 percent.
A year ago, only a scant few months had passed since the collapse of Lehman Brothers, the venerable investment bank. Its bankruptcy tipped the real estate market in Manhattan, the U.S. financial capital, into a tailspin as Wall Street's professionals lost their bonuses and even their jobs.
But the bloodbath predicted for the securities industry, New York City's economic engine, has so far failed to materialize. The industry has returned to profitability faster than expected, according to a report by New York State's comptroller, Thomas DiNapoli. It actually added jobs in September.
The combination of an apartment price correction and a Wall Street crisis averted is fueling the recent sales activity, said Brown Harris Stevens' Willkie.
The number of sales rose 8.4 percent to 2,473 from last year's fourth quarter, according to Elliman's report, while the number of homes on the market fell almost 25 percent to 6,851 units.
The uptick in demand even enabled 237 sellers to increase prices on properties already on the market, 20 percent more than last quarter, said Sofia Kim of StreetEasy.com.
This quarter, apartments that cost $500,000 or below -- which in Manhattan, is the lower end of the market -- accounted for almost a quarter of the sales, compared with 15 percent last year, Liebman said.
The pricing correction made this city a lot more affordable, she said. It gave the opportunity to people who had been priced out to come back in and it allowed more people to stay in.
Still, the inventory number that dropped so significantly in the fourth quarter could rise, Herman acknowledged. Sellers tend to pull their homes off the market during the holidays. That could hurt prices if supply outstrips demand.
Also, only buyers with the most impeccable credit can obtain mortgages right now, said StreetEasy's Kim. If lenders do not relax those standards, the pool of acceptable borrowers will inevitably evaporate.
The credit issue will undercut demand without a doubt, said Bill Staniford, CEO of PropertyShark.com, a foreclosure data website that collaborates on the Corcoran report.
Also, a true recovery in Manhattan's real estate market, including actual price increases, depends on a robust broader economy.
We are in a fragile economy, he said. Things could go either way. If we see worse job numbers, it could weaken.
(Reporting by Helen Chernikoff; editing by Andre Grenon)