Bonuses are making a comeback on Wall Street and that might help stabilize the Manhattan real estate market.
While Manhattan home prices dropped between 10% and 15% in the last quarter of 2009 compared with a year earlier, the losses have started to slack off, according to a host of markets reports released Tuesday by big New York brokerage firms.
“People feel there’s stability in New York. The fear factor is gone. The year 2009 started out in absolute fear. This year is starting off in hopefulness,” said Pam Liebman, CEO of the Corcoran Group, one of New York’s biggest real estate brokers.
For the fourth quarter, the Corcoran Group reported a median price drop of 15% year-over-year to $795,000. That was also 4% lower than three months earlier.
Prudential Douglas Elliman put the declines at 10% year-over-year and 4.7% quarter-over-quarter to $810,000.
“Fundamentals are beginning to look a lot better,” said Heym. “Price declines have been slimming, the economy seems to be in recovery and Wall Street bonuses are back.”
The biggest improvement was in sales volume, which was actually above average for the quarter. Sales grew 8% year-over-year and 11% quarter-over-quarter, according to Jonathan Miller of the appraisal firm Miller Samuel, which produces the market report for Prudential Douglas Elliman.
All those sales carved into inventory, culling 18% from what was available just a quarter earlier and 25% year-over-year, Miller said.
Homebuyers hit the market as Wall Street’s fiscal health improved. Financial industry jobs pay much better than any other major New York business, with the sector accounting for just 5% of employment in the city but a whopping 25% of earnings. And those bankers pulling down big bonuses buy many of the luxury apartments sold in Manhattan’s priciest districts.
However, any price upturn could encourage sellers who had been holding back to put homes on the market. There’s no way to know how much of this “shadow inventory” could emerge, but any significant addition could dampen prices.
Miller also pointed out that job losses may continue, which could certainly harm buyer confidence, even for people still with jobs. And obtaining financing for mortgages is also still challenging.