The Federal Reserve Board came out with its third-quarter report for New York on Wednesday, and amid “scattered signs of a pickup” since the last report across the rest of the economy, that residential real estate is faring slightly better than other sectors.
As outlined in previous reports on this blog, the signs are mixed.
- Not Yet A Bottom, But Turning A Corner as Sales Surge
- Tide Turning, Condition Still Critical
- The Fall Inventory: A Possible Return to Normalcy
FRB states that, especially in the high-end sector, the residential real estate market is generally weaker: prices and rents, while up from the worst levels of the second quarter, continued to slide. Delinquency rates are rising, on both commercial and consumer mortgages. But while credit is still becoming tighter, loan demand for residential mortgages has actually inched up while declining in other sectors: 38 percent of bankers reported higher demand, while only 16 percent reported a decrease, despite the tightness of standards.
Sales in the Manhattan apartment market rebounded since the lows of the second quarter, but are still lower than last year. To compound it, prices continued to decline and are 18 percent lower per square foot compared to last year. Inventory has tightened, but days on market have increased, and landlords reported having to offer more perks, like one or more months free rent, on rental units, already fetching 10 percent less than last year. Vacancy rates, while finally coming off their highs, are expected to rise again in the winter season. While meager, these results are slightly more encouraging when compared with the rest of the economy: in the commercial real estate market, Manhattan vacancy rates continued to rise through the third quarter, and rents are 20 percent lower from last year, not 10 as in residential and don’t account for perks.
Elsewhere, auto sales have dropped sharply, although that partially corresponds to the end of the cash-for-clunkers program. Retailers said sales have improved slightly, as did consumer confidence, but tourism remains slow. The labor markets continue their slump, aside from the manufacturing sector, which reported a moderate increase in activity. There’s no hiring across sectors, aside from finance-there, however, compensation not counting bonuses has “fallen sharply.” The report does, however, come across as cautiously optimistic: most of the people contacted for the information, while not exuberant, do anticipate a better fourth quarter.