Manhattan property market began to feel hurt

Manhattan apartment sales fell for the fourth straight quarter and prices for the most expensive apartments dropped for the first time since the recession began as the national housing slump hit the metropolitan area.

Fourth-quarter transactions dropped 9.4 percent to 2,282 units from a year earlier. While the overall median sales price rose 5.9 percent, luxury prices dropped 3.9 percent and the median for all resale apartments slid 3.6 percent.

In Manhattan, the inventory of apartments listed for sale rose almost 40 percent from a year ago to 9,081 units. Apartments sat on the market for an average 159 days before selling in the fourth quarter, up 21 percent from a year earlier.

On the other side, Manhattan office rents fell the most in at least two decades last quarter as securities firms cut jobs and tenants leased less space. Fourth-quarter rents dropped 4.8 percent to $69.44 a square foot from the third quarter.

Finance jobs drive the Manhattan market. Employment at Wall Street investment banks accounted for almost 15 percent of the city’s total privately paid wages in the first quarter of 2006. So it’s unsurprising that the U.S. recession and the global credit crisis have charged heavy tolls on Manhattan property market.

The end of the year marked the beginning of Manhattan’s entry into a new kind of market. Manhattan has gone from being a seller’s market to a buyer’s market, buyers are being now more cautious and hunting for bargains. Tenants are gaining the upper hand in negotiations with landlords and winning discounts on rents, brokers are seeing normal 15% discount or more.

Many new condominiums there were built to attract wealthy Wall Street bankers and foreign investors. But foreign investors are having a real tough time getting mortgage money, and a lot of those young affluent buyers aren’t so affluent any more.

Wall Street miracle should be found in the history book now.