Manhattan homebuyers driving hard bargains as supply swells

New York

IN his hunt for an apartment on Manhattan's Upper West Side, Hal Walker found the perfect one-bedroom in an Art Deco building across from Central Park. It had languished on the market for almost six months.

Walker bid US$30,000 below the US$865,000 asking price, then refused the seller's counteroffer. Yet he's moving in next week.

"Would you lose sleep tonight if you lost this apartment?" Mr Walker recalled his broker asking. "I said no."

Manhattan homebuyers are getting bolder these days, demanding bargains or walking away from deals in a market where inventory is swelling.

In the three months through June, purchases fell 17 per cent from a year earlier to 2,629, according to a report on Tuesday by appraiser Miller Samuel and brokerage Douglas Elliman Real Estate. That was the lowest tally for a second quarter since 2009, when the global recession chilled deals.

Of the sales that were completed in the quarter, 54 per cent were for less than the asking price. Another 37 per cent of transactions closed at the asking price, but often that figure had already been reduced. Combined, the share of purchases without a premium was the biggest since the end of 2012.

"It's about perception - that the market went way up, and it went way up real fast, and it's not happening anymore, and I am not going to be the fool who gets burned by overpaying," said Steven James, Douglas Elliman's chief executive officer for New York City. Buyers "do believe that over time, the market will go up, but it's not going up right now".

The median price for all homes that changed hands in the quarter dropped 7.5 per cent to US$1.1 million, the second consecutive year-over-year decline, the firms said.

There were 6,985 homes listed for sale at the end of June, up 11 per cent from a year earlier and the most for a second quarter since 2011 as properties came to the market faster than buyers closed deals.

"'We are in a price correction, there's no doubt about that," said Hall Willkie, co-president of brokerage Brown Harris Stevens. "Buyers are very resistant to paying anything that isn't justified."

He added: "There was a time for many years that if buyers had the money and they were asked to pay 10 per cent above comparables, they said, 'You know what? It will be worth that next year or in two years, why not?' That mentality is gone."

That's why Roger Gillen, the Brown Harris Stevens broker who advised Mr Walker in his apartment hunt, told his client he could play it cool.

Mr Walker, 67, was working with Mr Gillen to relocate to the Upper West Side - closer to the cultural attractions he frequents - after more than a decade of living in Jackson Heights, Queens. They quickly zeroed in on a renovated one-bedroom co-op on Central Park West at 92nd Street, with a glittering lobby that made him feel "like you're walking into a Fred-and-Ginger movie," said Mr Walker, a retired creative director for a public-relations firm.

The owners first listed the unit in November for US$875,000, then lowered the price in March to US$865,000. Mr Walker offered US$835,000, and the sellers countered with US$850,000.

"I said no," Mr Walker recalled. He got the apartment anyway, closing on the deal last month at his bid price.

"You just have a sense that the owner wants to get rid of it," he said. BLOOMBERG