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Manhattan Real Estate Market Seems to Stabilize, With Prices Up and Sales Volume Down

After two years of unpredictable sales trends, the Manhattan real estate market seems to have settled into a more typical and seasonal pattern, with prices rising slightly and sales volume dipping in the recent summer months, third-quarter market reports to be released on Friday indicate.

Prices increased for the fifth straight quarter, with the average sales price hovering around $1.43 million and the median price around $910,000, according to data provided by the city’s four largest brokerage firms. But prices are still well below the market’s height a couple of years ago, when the average was higher than $1.7 million and the median was close to $1 million.

“We have hit bottom, and we’re probably improving ahead of schedule,” said Diane M. Ramirez, the president of Halstead Property. “But that just means we’re into a more normal market. We’ve moved out of critical care, and we’re stabilized now.”

After six unusually busy months at the beginning of the year, caused in part by pent-up demand from 2009 and by the federal home-buyer tax credit, the Corcoran Group’s report indicated that sales volume dropped 19 percent from the second quarter to about 3,000 deals. “I think it’s a sign that the wild ride is over and real estate is back to its basics,” said Pamela Liebman, the chief executive of the Corcoran Group.

Sales numbers for Prudential Douglas Elliman showed similar trends, with the average price of its sales up 3.8 percent from the second quarter to $1.48 million and the median price up 1.7 percent to $914,000. But Jonathan J. Miller, the president of the appraisal firm Miller Samuel and the author of Prudential Douglas Elliman’s report, cautioned against reading too much into the increase. “The average is up,” he said, “but prices did not really rise, because it’s all about the mix of apartments that actually sold.”

Mr. Miller’s numbers studios and one-bedroom apartments priced below $1 million dominated the market a year ago, but this year many more people were buying two-bedroom apartments with prices much closer to $1.25 million. “The only reason the average and median prices are up,” he said, “is because the two-bedroom market is returning from being depressed to a more consistent, normal level.”

Dottie Herman, the chief executive of Prudential Douglas Elliman, said that in early 2009, when very little was being sold, nearly 70 percent of her company’s deals were under $1 million. “The market came back from the bottom up,” Ms. Herman said. “Now the bigger units are selling again, and the market is basically flat, but it’s healthy.”

Hall F. Willkie, the president of Brown Harris Stevens, said the high end of the market “was really the hardest hit, and now we’re finally seeing an increase there.”

“With the steady growth we’ve seen,” Mr. Willkie added, “I think we can be optimistic looking ahead.”

The same trend was seen at Corcoran, where brokers have closed more deals over $5 million so far in 2010 than in the first nine months of 2007, at the height of the market, Ms. Liebman said. “After Lehman Brothers collapsed, it wasn’t very chic or acceptable to go out and spend big bucks, but now that seems to be O.K. again,” she said.

But Mr. Miller said that with unemployment still high and with the credit market still tight, “the best-case scenario for the market in general is we continue to move sideways, and we’re more likely going to see a little more erosion in prices before we really rebound.”

Data released by the real estate Web site showed that the level of sales activity had already started to slow. Streeteasy counted 1,832 listings that went into contract in the third quarter, a 37 percent drop from the previous quarter and 30 percent lower than the same time last year.

By Vivian Toy


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