Manhattan apartment prices drop as Lehman hits home

The median price fell 18.5 percent from a year earlier to US$835,700, New York appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said Thursday. The number of sales plunged by half, the most since Miller Samuel began keeping data in 1989.

“The standstill that existed after Lehman Brothers has been broken, and it was the sellers that cried uncle,” Pamela Liebman, chief executive officer of New York-based property broker the Corcoran Group, said in an interview.

Values are falling broadly in Manhattan for the first time in the almost four-year U.S. housing recession, with declines now seen in co-operatives and condominiums of every size and price. Private-sector employment in the city dropped by 91,200 jobs, or 2.8 percent, in the 12 months through May as Wall Street losses and asset writedowns topped US$1.4 trillion.

The price of studio apartments declined 16 percent from a year ago to a median of US$405,000, according to Miller Samuel. One-bedrooms dropped 17 percent to US$650,000 and two-bedrooms fell 23 percent to US$1.27 million. Three-bedroom units fell 37 percent to US$2.35 million and four-bedrooms plummeted 47 percent to a median of US$3.92 million.

The Miller Samuel-Prudential data reflect for the first time what sellers have known for at least six months: The way to lure a buyer in the current market is to cut your price.

About 32 percent of second-quarter listings included discounts from the original asking price, according to StreetEasy.com, a Web site that gathers Manhattan property listings from brokers. The deepest concessions were on Central Park South and in the Financial District, where list prices were pared by an average of 10 percent.

“The sellers who want to sell are reducing their prices,” Liebman said. “The ones that aren't, are either sitting on them overpriced or waiting for another day.”

James Rosenthal didn't want to wait.

Rosenthal and his Upper West Side neighbor on Riverside Drive near 77th Street put their adjacent apartments up for sale in February 2008 for US$6 million, hoping to lure a buyer that wanted to maximize the 3,800-square feet of combined space.

Then Bear Stearns collapsed and the neighbors cut their price to US$5.75 million, then to US$4.96 million.

The properties sold for US$3.6 million, a 40 percent discount from the original asking price, on April 20, said Rosenthal, who is a senior vice president at New York real estate brokerage Brown Harris Stevens as well as a recent seller.

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