When I attended a real estate conference earlier this year in New York City, I remember many industry experts and local Realtors talking about how the Big Apple had weathered the storm after the housing bubble burst. At the time, some said Manhattan's high-priced dwellings made it difficult for unqualified buyers to enter the exclusive market, which helped insulate them from the subprime meltdown. But now, nearly six months later, it appears that not even N.Y. is immune from catching the cold that has the rest of the nation's housing market bedridden.

The Inman news service recently reported that real estate and appraisal company Miller Samuel, in a quarterly report prepared for Prudential Douglas Elliman Real Estate, indicated that sales of all co-ops and condos fell 22 percent in the second quarter, compared to the same quarter last year, with inventory swelling 31 percent and the median sale price rising about 15 percent to $1.03 million.

In a separate report, real estate data company PropertyShark.com and The Corcoran Group reported a 38 percent year-over-year drop in sales in the second quarter, with the median sale price up 13 percent. Many real estate experts attribute the price growth to the strength of the high-end sales market, especially the new trophy properties at 15 Central Park West and the Plaza Hotel.

Affordability in N.Y.
But the sales decline and unsold inventory (which approached an eight-year record), may be signs that prices should be poised to drop in the nation's most expensive urban housing market. Don't pack your bags and head to the Big Apple just yet. Manhattan real estate prices still remain out of reach for the average middle-class worker. The average price per square foot of a co-op reached a record $1,146, while the median condo sales price topped out at $1.267 million, according to Miller Samuel.

This Manhattan co-op unit boasts 5-beds, 5-baths, a 30-foot-long living room with a fireplace and sweeping views of the river. The unit is listed at $9,850,000.

Bloomberg news reports that while prices in N.Y. are holding up for now, buyers remain wary and apartments are taking longer to sell. The average time spent on the market rose 15 percent to 135 days, according to Miller Samuel. At the end of May, there were 7,320 housing units for sale in Manhattan, the second-highest number for the month since Miller began keeping records in 2001.

Cause and effect
Real estate agents in Manhattan have cited the recent slowdown in the country's economy coupled by the major layoffs on Wall Street and tougher lending requirements as the main factors impacting the N.Y. housing market.

While there are still first-time buyers in the market, Mitchell Hall, an associate broker for Coldwell Banker Previews International in Manhattan, told Inman News that "it's a tougher mortgage market right now and larger down-payment requirements are difficult for some buyers."

The co-op market, Hall said in the article, "typically requires a 20 percent down payment, and in some cases, a 25 percent down payment. And for condos, most lenders are requiring at least a 15 percent down payment."

It just goes to show the magnitude of the subprime mortgage mess. From small towns in Middle America to high-end luxury housing markets in Manhattan, no one market is bigger than this looming problem. Real estate may be local, but like a contagious cold, everyone is susceptible.

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.