The Manhattan real estate market is bucking the national trend in home prices, according to the latest so-called beige book, released yesterday.
"Districts that reported home prices all saw overall declines; one exception was the Manhattan coop and condo market, where prices increased 5% compared with a year ago," the Federal Reserve writes in its publication summarizing national economic conditions.
The beige book, which consists of anecdotal information from all over the country, is published two weeks before each of the eight annual meetings of the Federal Open Market Committee. The group is scheduled to meet next on March 18, when it is widely expected to cut the key interest rate by 0.50%. The book is meant to inform the FOMC members of the state of the American economy, and this issue uses information gathered between January 16, when the last beige book was published, and February 25.
"Anecdotally, I see prices increasing at a moderate pace," the president of the appraisal firm Miller Samuel, Jonathan Miller, said, adding that he would not be surprised if residential prices in Manhattan increased 5% to 6% year-over-year in the first quarter.
In the fourth quarter of 2007, the latest data available, the median sale price for Manhattan coops and condos increased 6.4% compared with that period the year earlier, according to Mr. Miller. The luxury apartments that make up the top 10% of the market, or those priced at more than $2.8 million, increased 28.4% over the same period. Median prices are more accurate indicators than average prices, as they exclude outlier data, such as the ultra-luxury apartments at 15 Central Park West and the Plaza, which skew average prices upward.
The rest of the country is not as fortunate as Manhattan.
"Residential real estate markets were generally weak over the last couple of months," the Fed writes. "Sales were low in every District with very few local exceptions," it adds, pointing to sluggish sales in the Boston, Minneapolis, Richmond, and St. Louis, with some of the areas reporting drops of more than 20% year-over-year. "Contacts in the Chicago, Kansas City, and Philadelphia Districts cited tight credit conditions as a reason for low sales; each of those districts either reported or expected stabilization of demand for homes in the low- and mid-price ranges." As for the overall economy, it is clearly showing signs of a slowdown, market experts say. "The Fed's beige book description of economic activity is 'economic growth has slowed' from 'modest economic expansion' in the last one," a market analyst at Miller Tabac + Co., Peter Boockvar, wrote in a note to clients.
In other New York economic news, the office market slowed in January, with the vacancy rate increasing slightly, to 7.6%, while asking rates were similar to the fourth quarter of 2007, according to the Fed.
The construction industry is growing weaker, with builders stopping many new construction projects and "one industry expert cit[ing] as a major problem the fact that prices for redevelopment land have not come down in line with home prices," the Fed writes. Meanwhile, consumer spending in New York was weak, and tourism slowed. "One chain reports sales of women's apparel as particularly sluggish, while another describes big-ticket home goods as the weakest category," the Fed writes.
Broadway theaters saw fairly strong attendance in January and early February, rising 3% to 4% from a year earlier. Still, total revenues were up just 1%, reflecting lower average ticket prices.