Meh-hattan Apartment Prices and the Phantom Double-Dip

wizard oz house Meh hattan Apartment Prices and the Phantom Double DipThe fourth-quarter Manhattan housing numbers came out on Tuesday. The Times said up, The Journal said down. Corcorcan saw one thing, Halstead another. Who’s right, who’s wrong, what gives?

Naturally, we called soothsayer Jonathan Miller for the answer.

“My takeaway is, relative to where we came from, it’s positive. Relative to where we’re going, it’s neutral. There’s a lot going on, but we’re not done yet. It’s the macro stuff we’re concerned about.”

By and large, apartment prices are up relative to this time last year (by 0.7 percent) but down from the third quarter (by 3.4 percent), according to Miller’s own numbers for Elliman. Basically, 2009 was so crazy, so backward, that the shockwaves created by the credit crunch saw almost no sales in the first two quarters of 2009 with bunches and bunches of them in the last two. Fourth quarter 2009 set a record in terms of volume, in fact. Now we’ve returned to an (uneasy) normal.

Helping to fuel all this activity, of course, was the much-vaunted first-time homebuyer tax credit.  And that’s where things got interesting in the discussion with Miller.

There has been a lot of talk about a housing double-dip–including in these here pages–about how everything is about to go right off a cliff again. Given the stagnation in apartment sales, we had to ask: Is this where we’re headed, right back down, even here in high-flying Manhattan?

“We’re not in a double-dip,” Miller explained. “Not even close.”

See the problem is, in Miller’s view, the tax credit was a sleight of hand, a waste of money even. “It created an artificial high, and now we’re suffering through an artificial low,” he said “And it wasn’t even really a high, it was more of a neutral.”

What happened was, the tax credit caused a lot of people who maybe would have bought homes somewhere down the line, when prices fell to a suitable level, to go out and do so a little bit sooner. But, ultimately, it had no impact on the fundamentals within the housing market. The feds were stealing from Peter to pay Paul, as it were. We’re only now unwound from the tax credits, and so the slide continues where it left off. Regarding demand, the economy just isn’t there yet for a real recovery.

That’s a recovery Miller does not expect at least until the end of 2012 or beginning of 2013, either. “Best case, we move sideways, but I’m more inclined to think we’re seeing a price or sales erosion in 2011,” Miller said.

“We’ve been living on a roller coaster ride, so at least we’ve gotten off that,” he added.

What now, then, The Observer asked. A merry-go-round?

“Hah, no. I’m feeling more like we’re on the tea cup ride,” Miller said. “We’re going round and round and not getting anywhere. And turning green in the process.”

mchaban [at] observer.com | @mc_nyo