Manhattan Housing Market Booming… But Why?

Neil Binder has been making New York home sales since 1979, and this is the first time a reason has escaped him when it comes to explaining the booming market.

“The market is extremely strong across the board. [As of] January 1, everything was extremely busy,” Binder said last week. “Given what we had last year, we are all surprised. Last year was $h!t.”

Well, someone must’ve come by with a plastic bag, because in 2007, at least up until right now, the Manhattan housing market has been far from it.

Binder says that his real estate agents are reporting “open houses with 50, 75 people in attendance — that’s staggering.”

Mike Simon, president and CEO of Century 21 NY Metro, says that “spring came early” in 2007, with transactions at the brokerage picking up in December.

“We can’t see that ending in the new year,” Simon said.

Eight units of a new Chelsea development, 100 West 18th Street, went to contract in the first three days of sales during the brutal cold of late February, according to one of the conversion’s developers, Scott Aaron of the Brauser Group.

“I can’t say when they will all sell,” Aaron said. “What I can say is, if the pace keeps up, the pace that’s been set the past three weeks, it will be much sooner than we thought. I originally thought it would take six to eight months.”

Such New York mortgage demand and subsequent sales strength, if history is a reliable guide, should last at least through the spring, a season when activity normally picks up from the winter.

But if sales are already strong, then this spring, which starts next week, might flex stronger than springs normally do - especially if mortgage rates remain so low.

Last year’s was indeed a dud, as far as Manhattan home sales go: Condo and co-op sales dropped during the spring — April through June — from the three winter months before, according to home appraisal firm Miller Samuel, inching down from 2,005 to 1,934 (and then back up in the summer).

For 2005, however, spring sales dominated the year — 2,181, a 7.5 percent increase from the winter months of January-March, the most that year, which was also the year of record low home loan rates and a supposed Manhattan real-estate boom.

In the four years from 2002-2005, Manhattan condo and co-op sales increased each spring over the winter. In 2002, like in 2005, spring was the busiest sales season of the year — or, for that matter, of any sales season of any year going back to at least 1989.

In the spring of 2002, as perhaps a harbinger of the boom to come, 2,842 condos and co-ops changed hands, according to Miller Samuel.

The market’s strength now, and the prospect of a strong spring (a lot of winter contracts will show up as spring sales), have left real estate agents and mortgage brokers giddy but a bit confused.

The housing market boom across the nation flopped spectacularly last year, and the melancholy pervaded through Manhattan, although by and large, the borough’s market stayed generally healthy.

If things are slowing all around it, why is Manhattan still - literally and figuratively - an island of success? And so suddenly successful after an excruciatingly normal 2006?

Follow the link to continue reading in the New York Observer …