Total sales volume and the value of properties sold in the second quarter both declined dramatically from last year, according to the latest second quarter numbers. Inventory rose markedly from last year’s numbers.

While there was little room for optimism while reading the 2nd quarter numbers, there was also a small room for harbingers of doom: Prices are falling, but in a fashion that reflects the market adjusting to new demand levels – not a market whose bottom has fallen out.

It would seem that the 2nd quarter of 2009 reflected a continued adjustment from the events of the previous two or three quarters.

Median prices of sales completed during the 2nd quarter of 2009 were down 18.5% from the same period last year. Counting only re-sales – that is, not including figures from New Development sales  – the decline was a robust 25.6%.

While the total volume of sales was dramatically lower than its 2008 equivalent, typical seasonal patterns did hold, with sales volume in the 2nd quarter up roughly 28% from the previous quarter, according to Prudential Douglas Elliman. A separate report seemed to indicate that the bulk of that sales activity has come not from new New Developments, but from resales.

Perhaps the most critical question left unanswered by the report was what was the relative role of higher mortgage rates. Are natural demand rates being depressed by developments in the financial industry, or is the demand itself reduced due, presumably, mostly to changes in the labor market?

Whatever the sources of reduced demand, sellers are feeling the pinch right now: The average New York City apartment that was sold during the 2nd quarter was on the market for 162 days – up from 135 days.

Accordingly, sellers were willing to knock an average of 7.8% off of their listing price. While this figure is lower than one might intuit, it’s important to keep in mind that discounts in final sales price do not include the many other details on which sellers and co-op boards are willing to compromise.

Anecdotes quoted in the press have pointed in part to the lack of tolerance for not getting a deal. Sellers that are unwilling to compromise are viewed as obstinate and unnecessary obstacles to a good deal for the buyers.

All in all, the 2nd quarter numbers seem to show that buyers not deterred by mortgage rates are moving aggressively to capitalize on current weakness.

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