Above: A 56-foot indoor pool with two hot soaking tubs papmers residents of 515 East 72nd Street/Miraval Living (www.515e72.com), available through Corcoran Sunshine. Photo: William Abranowicz

Home Buyer's Guide

By Jason Forsythe

January 22, 2010

As the residential real estate market continues to fight its way out of the market collapse of a year ago, buyers are beginning to realize that the bargains currently on offer represent a rare opportunity to own or upgrade at substantial discounts. With interest rates poised for an increase in 2010, that rare opportunity for buyers may not last long.

Consider where the market was a year ago, when home buying in the New York metropolitan area came to a virtual standstill. The Lehman Brothers collapse had delivered a body blow to the local economy, just as the credit markets had frozen, and the stock markets were in free fall. The number of transactions in Manhattan during the first quarter of 2009 had dropped below 1,200 - the lowest level in nearly 15 years. The freeze continued throughout last spring and lasted until the summer, when sales slowly began to pick up.

Then the year-end reports released earlier this month by the city's largest brokerages indicated the turnaround had legs. The fourth quarter - traditionally never a strong one in residential real estate because of all the holidays - confirmed the continued upswing in sales. According to the Prudential Douglas Elliman report, the last quarter of 2009 saw a total of 2,473 Manhattan sales, 10.9 percent more than the prior quarter.

The confirmation came after a year of seemingly unrelenting economic bad news, toward the end of which sellers in Manhattan finally began accepting the new economic reality by lowering their prices. The average fourth quarter sales price of a Manhattan apartment was $1.296 million, off 12.7 percent from $1.485 million in the fourth quarter of 2008.

The Corcoran Group report, which uses different metrics, estimated that there were approximately 3,400 apartment closings in fourth-quarter 2009, an increase of 48 percent from the same quarter in 2008. "After a year of downward pressure, the market is reversing - and buyers and sellers are finally at a place where they are seeing eye to eye," said Kelly Kennedy Mack president of Corcoran Sunshine Marketing Group. "Overall, confidence in general is up leaps and bounds, and more people are now willing to get back into the market in that environment. We had increased sales activity at every single Corcoran Sunshine site last quarter, and our average price per square foot in new developments for the period was about $1,400 - averaging north of $2.4 million per transaction - where a year ago we were looking at very few deals, most of them at $1.5 million and below. Within our own portfolio, we are up more than 60 percent in terms of deals completed in the fourth quarter 2009 versus the fourth quarter of 2008."

As prices declined last year, the inventory of unsold Manhattan apartments, which had been at record highs, finally started coming down. The median sales price last quarter represented a 10 percent drop over the same period in 2008, and a 4.7 percent drop over the previous quarter. At the same time, the average sale price was down 12.7 percent since the fourth quarter of last year, to $1.296 million. Remarkably, at a time/when much of the country was continuing to be plagued with excess inventory, Manhattan's inventory of unsold apartments fell 25 percent during the fourth quarter from the same time the previous year.

"There are a number of factors that are contributing to the positive change we are seeing in our market," explained Dottie Herman, president of Prudential Douglas Elliman. "Low interest rates and great prices, plus the extended homebuyer tax credit, have created a perfect storm for home buyers right now. It is a wonderful time to enter the marketplace, trade-up or refinance, and everyone should take advantage of this unprecedented window of opportunity."

It is also a busy time for real estate agents eager to capitalize on the pent-up demand that built up after a rough period. "Since the economic downturn, so many potential buyers have been in a holding pattern, going about their lives, but sitting on the sidelines," suggested Iva Spitzer, executive vice president at Corcoran Group, who is managing the rental-to- condominium conversion of Merritt House, the 38-unit prewar building at 167 E. 82nd Street. "Now that prices have come down and stabilized, we are starting to see a flood of these people coming back to the real estate market. At the same time, foreign buyers are adding to the flood because of the favorable exchange rates."

Merritt House came on the market just three months ago. Its opening comes at a rare opportune time for residential real estate in recent years. "We had a soft, quiet pre-opening in November and December, but we are coming out with a grand opening this month, just as the market is starting to heat up - and we have already done quite a few deals. This combination of pent-up demand and foreign buyers interested in a brand new prewar condominium in a prime Upper East Side location has created a tremendous rush of business."

Copyright c 2009 The New York Times Company. Reprinted with Permission.