The last market report produced by the appraisal firm Miller Samuel, on the second quarter 2011, tells us that Manhattan is “hiccupping” but overall trending positively.
This is true especially if we consider some areas of the city that achieved the status of “evergreen”, meaning they reached their full splendor and are growing steadily. An example is the Upper West Side.
The sales volume is more or less the same as last year, but there was indeed a 10.7% increase between the first and the second quarter of this year.
This is a bumpy ride. One moment can bring  a lot of activity with many people attending open houses, while another moment can result in only few people looking at properties.  The cycle repeats and continues.
To be noted: 10.5% of Manhattan second quarter 2011 sales have closed above the listing price! It is the first time since the demise of Lehman Brothers in 2008.

Rentals
Given that the rental market has come back strong, landlords and apartment owners are deciding to renovate their real estate more and more often. They are convinced that the renovation will bring in higher returns, and they are right.
Until two years ago we would notice widespread rental incentives offered to new tenants. Today this is no longer the case, and incentives are quite scarce.
Rightly priced properties don’t last more than a week in Manhattan. And I am not only talking about gorgeous apartments, I mean the so-so ones too.
The brokerage firm Citi Habitats reports that the average rent paid in Manhattan in May 2011 was shy of the 2007 peak levels by only 1.2%. (Investors, are you paying attention?)
Of the roughly 6000 apartments present in the database of the firm only 10% offered incentives last May.
With renewed confidence, owners are making renovations… and seeing ROI (Return on Investment)..
Case in point: One apartment used to rent in 3 or 4 weeks time before the kitchen and bathroom were redone. Now with the refurbished kitchen and bathroom, the same apartment rents in about a week with at 15% higher price!
Renters tend to notice the presence of stainless steel appliances (instead of the white ones) and granite countertops above all.

Sales
The moment buyers were trying to negotiate a 30% discount is long gone.
Nowadays sellers are becoming more confident about the market situation and sometimes believe their property is worth more than comparable ones. How can it be that an owner sells his/her apartment for $40,000 more than the same unit, a few floors up, which sold 4 months ago (and that was renovated!)?
The result is that, at times, sellers do not accept offers that are perfectly in line with the market situation. They are sure their property will increase in value dramatically over the next 3 or 4 years, and they wait.

UWS
If one hand we have unrealistic sellers, on the other we have areas of the city where demand for certain kind of properties is high and the offer is low.
It is the case of the Upper West Side, where apartments on the market with 3 or more bedrooms, in the luxury category, are rare. It is not uncommon to witness bidding wars that often end up with a closing price higher than the listing price.
The same scenario is not repeated in the smaller apartments segment, studios and one-bedrooms.
The offer is definitely larger, and we can notice more pressure on the prices.
Investment opportunities can be identified then; since smaller apartments are always in demand in the rental market. There are many singles in Manhattan!
Experts in the field of townhouses agree that a reverse trend (compared to the apartment one) is affecting transactions.
The smaller buildings, priced below $10M, are the ones selling the most, while the luxury segment $10M+ is lagging behind.

This is it for today, dear friends.
I am always available to answer your questions regarding your next real estate investment in New York City.
Till next time.

Warm Regards,
Riccardo Ravasini