Welcome to 2009: Inventory Way Up, Prices Way Down

The Prudential Douglas Elliman fourth quarter market report, prepared by the independent appraisal firm Miller Samuel, contained two important statistic that should delight potential homebuyers and add a sense of urgency for sellers.

One, Manhattan apartment inventory climbed nearly 40% in the fourth quarter of 2008, compared to the same period last year. Two, sales contract activity declined by 40% to 75%. The reduced sales activity, coupled with the hefty increases in inventory, will almost certainly lead to significant price reductions this year. Furthermore, the downward trend in prices is likely continue throughout at least the first half of 2009.

Sellers are going to need to settle for less, or they simply are not going to be able to sell. Look for actual selling prices, (the contract price, not the last asking price) to fall by as much as 30% from the peak of the market (second quarter of 2008). All told, 2009 will be a great time to be a buyer in Manhattan!