Manhattan apartment sales, prices drop in first quarter of 2011 after 6 quarters of increases

BY Phyllis Furman
DAILY NEWS BUSINESS WRITER

Friday, April 1st 2011, 4:00 AM

Sabo/News

The average price of a Manhattan apartment dropped to $1.36 million, a 5% decline from the previous quarter.

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After making some slow improvements last year, Manhattan‘s apartment market sputtered at the beginning of 2011.

As buyers sat on the fence, sales volume dropped and prices fell during the first three months of this year, according to real estate reports to be released Friday.

The average price of a Manhattan apartment dropped to $1.36 million, a 5% decline from the previous quarter and even worse when compared with last year, according to brokerage firm Brown Harris Stevens.

It was the borough’s first quarter of declining prices after six consecutive quarters of price increases, the brokerage firm said.

“After a year and a half of steady growth, the recovery stalled in the first quarter,” said Gregory Heym, Brown Harris Stevens’ chief economist.

Even so, the real estate picture in Manhattan is much brighter than the nation’s, which has seen a steady decline in housing prices.

The New York City economy “has recovered faster and our housing market has been recovering for over a year and half leading into this quarter,” said Heym. “That puts us in a much better position.”

Unlike other parts of the country, Manhattan has not been hit by the foreclosure crisis, he added.

The number of apartment sales in Manhattan in the first three months of the year fell sharply, dropping 23% compared with the same quarter a year ago, Brown Harris Stevens reported.

Another report, from research firm StreetEasy.com, showed deals fell 27% from last year.

A key reason is many homeowners, especially wealthier New Yorkers, rushed to sell last year before the Bush-era tax cuts were set to expire at the end of 2010. That accelerated sales that would have spilled over to this year.

Sofia Song, StreetEasy.com’s vice president of research, said deals fell at the beginning of 2011 because buyers saw prices drop and had no sense of urgency to make a move.

“Consumers are either taking a wait-and-see attitude or they can not get financing,” Song said. “There is no compelling reason to act now.”

With unemployment still high, she does not see prices going up in the near future.

“We will be bouncing along the bottom for a while,” Song said.

Jonathan Miller, president of appraisal firm Miller Samuel, which compiles reports for brokerage firm Prudential Douglas Elliman, attributed the decline in apartment prices to the fact that co-op sales outpaced condo sales in the quarter. Co-ops are generally less expensive than condos.

“There was a shift in the mix to lower-priced properties,” Miller said.

There was some good news for sellers on the upper East Side. The price of two-bedroom co-ops rose nicely, jumping 16% compared with the fourth quarter of 2010, to $1.6 million, according to Brown Harris Stevens.

The East Side was the only market where prices rose over last year for both prewar and postwar co-ops and condos.

pfurman@nydailynews.com