Foreclosure List Prices Cut New York Apartment Sales Prices

Posted on July 6th, 2009 in New York

Foreclosure list prices have pushed down the prices of New York City apartments, according to real estate analysts and appraisers in the city.

In the second quarter of this year, the average sales price of a Manhattan apartment dropped from $1,669,720 in last year’s second quarter to $1,312,920, with prices falling by 21 to 24 percent.

The median price for apartments dropped by more than 18 percent to $835,700 compared to last year’s second quarter.

Meanwhile, sales prices for existing apartments, including foreclosure apartments, fell by more than 25 percent to $725,000 compared to last year’s second quarter. Compared to the first quarter however, the prices of pre-owned apartments rose by more than 7 percent.

While sales of newly-built apartments fell by over 50 percent compared to last year, sales of existing apartments, including foreclosure list apartments, increased by more than 28 percent, compared to this year’s first quarter.

Housing analysts said most of the price drop occurred in the last months of 2008 when the lack of residential credit was at its worst level.

A Manhattan real estate analyst said he expects sales of existing apartments, including foreclosure list apartments, to increase in the following quarters because of low foreclosure list prices.

Manhattan was previously immune to the foreclosure crisis that started in the last months of 2006 because of strong Wall Street activity. But the recession worsened, causing many Wall Street companies to collapse and many financial executives to get laid off or take substantial pay cuts.

Market analysts said New York City experienced an abrupt decline in home prices when the city’s large private corporations laid off large numbers of professionals.

Although business collapse in the metro area has largely slowed down, unemployment rate in the area in May reached 9 percent, the city’s highest since 1997, based on records from the New York State Department of Labor.

One real estate executive said prices of homes, apartments and foreclosure list properties have already taken a significant fall, so he does not believe prices would go down further by double-digit percentages.

He said many prospective home buyers will realize that the rise in mortgage rates will offset further price declines, so they will make their home purchases now.

Moreover, he said sellers are now willing to further reduce their pre-owned prices including their foreclosure list prices by a further 8 percent to shorten the number of days resale apartments stay in the market.

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