In time of economic hardship, Manhattan rarely reflects any sort of economic suffering. However with the most recent data released all that has changed. During the second quarter of the year, the average price for an apartment had fallen between 13 and 19 percent from a year ago.

Dottie Herman, president of Prudential Douglas Elliman a large real estate brokerage in New York said, “The city did a nosedive. There was virtually no business.”

On top of that, and not surprisingly the price of luxury apartments declined at an even steeper rate, between 17 and 26 percent. Luxury buyers disappeared when Wall Street jobs subsided and the so-called “jumbo loans” (anything totaling more than $730,000) disappeared along with the jobs.
Sales of new condos also suffered a similar fate. Fannie Mae, one of the largest mortgage lending houses enforced new rules requiring 75% of a new condo development to be outright sold before it would issue any mortgages to the potential condo buyers.

On a positive note sales started to show signs of recovery at the end of the second quarter, especially on the lower side of the market. This could be aided by the $8,000 federal tax rebate offered to new home buyers.

StreetEasy.com stated, “Sellers are beginning to adjust to the market. In the second quarter, the number of price cuts more than doubled from a year ago, with reductions averaging between 8 and 9 percent for condos and cooperatives.”

“It’s the beginnings of the new reality,” said Pamela Liebman, CEO of The Corcoran Group, “that 2007 and 2008 were not the norm, but the peak.” Time will naturally regulate the prices and adjust sellers to match buyers’ demands.

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