After almost two years of deep cuts in both sales and prices, there are signs that the housing market in Manhattan is finally stabilizing. The sales numbers are much higher as compared to what they were a year ago, and the increasing demand is ensuring that the price remains stable.
Total number of houses sold in Manhattan was 2,384 for the first quarter of 2010. This number is almost twice of that for the first quarter of 2009. Although this is about 3% lower than the sales figure from the last quarter of 2009, real estate analysts argue that comparison is not relevant. They say that the last quarter of 2009 was unusually strong and not representative of the overall trend in the market.
Several reasons have been attributed to the recovery in Manhattan’s housing market. The most important factor is that there was a lot of latent demand in the system, which is now leading to sales. As the financial crisis unfolded in 2008, a huge number of workers in the financial sector found themselves out of their jobs. Those who were able to keep their jobs had a much lower spending power last year because their bonuses plummeted. Now that the financial sector has staged a stellar recovery, people are bullish about the future and are ready to make real estate purchases from their higher bonuses.
Another factor that is lending some support to the market is that mortgage rates have stayed low. People understand that these rates are not going to be here forever and they want to make the most out of this opportunity to lock in a low rate mortgage. At the same time, the homebuyer tax credit from the Federal government could have provided further encouragement to buyers.
Although the market is not falling anymore, we could still be a long way away from seeing any sharp rises in sales or in prices. Inventory levels are still high and sellers trying to push the price up are finding it extremely difficult to make a sale.
Analysts and brokers agree that the sideways movement in price is here to stay, at least for the next few months. They say that sellers who have too high expectations are making it difficult for the market because buyers still don’t want to pay extravagant prices, no matter how good the property is.