Neil Binder has been in New York real estate since 1979, and this is the first year that a reason escapes him when it comes to explaining a market boom.
“The market is extremely strong across the board; come Jan. 1, everything was extremely busy,” Mr. Binder, a principal at Bellmarc Realty, said last week. “Given what we had last year, we are all surprised. Last year was shit.”
Well, someone must’ve come by with a plastic bag, because in 2007, the Manhattan housing-sales market has been far from it.
Mr. Binder says that his brokers are reporting “open houses with 50, 75 people in attendance—that’s staggering.” Mike Simon, the president and C.E.O. of the brokerage Century 21 NY Metro, says that “spring came early” in 2007, with transactions at the brokerage picking up in December. “We can’t see that ending in the new year,” Mr. Simon said.
Eight units of a new Chelsea development, 100 West 18th Street, went to contract in the first three days of sales during the brutal cold of late February, according to one of the conversion’s developers, Scott Aaron of the Brauser Group—without, Mr. Aaron said, any paid advertising. The 41 condos are going, so far, for at least $1,100 a square foot.
“I can’t say when they will all sell,” Mr. Aaron said recently. “What I can say is, if the pace keeps up, the pace that’s been set the past three weeks, it will be much sooner than we thought. I originally thought it would take six to eight months.”
Such sales strength, if history is a reliable guide, should last at least through the spring, a season when activity normally picks up from the winter.
But if sales are already strong, then this spring, which starts next week, might flex stronger than springs normally do.
Last year’s was indeed a dud, as far as Manhattan home sales go: Condo and co-op sales dropped during the spring—April through June—from the three winter months before, according to the appraisal firm Miller Samuel, inching downward from 2,005 to 1,934 (and then back up in the summer).
For 2005, however, spring sales dominated the year—2,181, a 7.5 percent increase from the winter months of January through March, and the most that year, which was also the year of the supposed Manhattan real-estate boom.
In fact, in the four years from 2002 through 2005, Manhattan condo and co-op sales increased each spring over the winter. In 2002, like in 2005, spring was the busiest sales season of the year—or, for that matter, of any sales season of any year going back to at least 1989. In the spring of 2002, as perhaps a harbinger of the boom to come, 2,842 condos and co-ops changed hands, according to Miller Samuel.
The market’s strength now, and the prospect of a strong spring (a lot of winter contracts will show up as spring sales), have left brokers giddy but a bit confused. The housing boom across the nation flopped spectacularly last year, and the melancholy pervaded Manhattan, though the borough’s market remained generally healthy.
So, if things are slowing all around it, why does Manhattan remain literally and figuratively an island of success? And why so suddenly successful after an excruciatingly normal 2006?
Market-watchers can toss off a few reasons.
Perhaps the most oft-cited is the record $36 billion Wall Street bonus season; but even that can’t explain the sales strength, as some investment firms don’t dole out bonuses until January or February, and, historically, bonuses don’t necessarily boost sales year to year in Manhattan. For instance, from the first half of 2005 through the first half of 2006, condo and co-op sales tumbled by 270—despite 2005 being a then-record year for bonuses.
Another reason cited: the strong local economy. But that, too, can’t explain by itself the healthy sales market; and the economy might not be as healthy as many think. In January, for the first time in months, the city’s unemployment rate went up, to 4.9 percent, according to the state Department of Labor. And the stock market’s been spooky lately, its activity not so reliable a barometer of success for the economy overall. (Of course, that may make real estate seem a sounder investment than securities, though not necessarily.)
Maybe, though, buyers were just ready—the so-called “pent-up demand theory” that brokers will talk about in some variation, wherein buyers waiting on the sidelines during the gloom-and-doom housing news of 2006 suddenly decided to plunge in en masse. Of course, this proof for this theory remains largely anecdotal.
Whatever the reasons for the market’s success, it seems likely to reverberate into the spring, if history is any guide and if Manhattan dodges an economic calamity. “I don’t know where the hell it’s coming from,” Mr. Binder of Bellmarc said. “Is it going to last? I’d like to think yes.”