WHEN it comes to the housing market, predictions are perilous business. A market that looked as if it was verging on a renaissance one month could, depending on the factors that go into analyzing it, look pretty lousy the next.
This has certainly been the case in New York City of late. The local rollercoaster comes amid dark news on the national housing market; and there are indications that the New York market may not be as resilient to the country’s economic woes in 2011 as it was in 2010.
For example, if you take a look at Manhattan data for October, from an analysis by StreetEasy.com, the number of newly signed contracts represented about the same number as in October 2007, a year before the housing crash, during a period considered a relatively healthy benchmark for the market. Any sign of normalcy is said to be good news these days.
The city’s biggest brokerages are reporting that their agents have been busy, and October is traditionally a strong month on the real estate calendar, which flew into chaos in 2008, 2009 and parts of 2010.
Also, August was a slow month for contracts signed — another factor more typical of the precrash days. And because of the lag time between signings and closings — typically about 60 days — that slowness resulted in data showing sluggish sales in October: another sign of normalcy.
Still, even with the higher volume of signed contracts in October — which would then be expected to show strong sales in December — average asking prices this October were down by 11 percent compared with October 2007, and the units selling were smaller, with deeper price cuts, according to Sofia Song, the vice president for research of StreetEasy.com.
“It’s a different climate,” Ms. Song said.
Jonathan J. Miller, the president of the appraisal firm Miller Samuel, who analyzes market data for Prudential Douglas Elliman, said that despite the bursts of “happy housing news” in 2010, driven in part by the federal tax credit that spurred home-buying early in the year, he expected the 2011 New York market to be weaker.
Mortgage interest rates are starting to creep back up from record lows; unemployment is still stubbornly high; and banks remain extremely strict on lending.
There are also uncertainties that could stall buying for the rest of 2010 and into 2011, and perhaps the biggest is whether Wall Street bonuses will be fat, slim, or somewhere in between. There have been mixed reports. Some have recently indicated that bonuses may fall far short of last year’s, which were ample enough to help spur buying in early 2010.
“If the bonuses are big as we go into 2011,” said Pamela Liebman, the chief executive of the Corcoran Group, “we’ll have the wind behind us. If the bonuses are down, the wind is at our face and it’s a tougher climb.”
There are also other question marks, including how the election will affect the market, particularly whether Congress will stop increases in capital gains and estate taxes, two key rates that heavily influence buying and selling decisions.
In 2011 the long-term capital gains tax is due to increase to 20 percent from 15 percent, and estates of $1 million or more would be taxable at top rates of 55 percent. But with the Republicans winning the majority in the House, lawmakers could step in to stop those changes, Mr. Miller said.
While acknowledging that the near future is a great unknown, city brokerages are clinging to a few factors that they say show the New York market will continue to fare better in 2011 than the national housing market.
Several brokerages pointed to an increase in foreign investment in New York real estate in recent months. A few also said that there had been a recent increase in sales of high-end properties — those listed for $10 million and above — the kinds of deals that for the most part had been rare since the crash.
The volume of transactions and the prices of properties in the luxury niche are still well below those before the crash, but sales at the high end can promote consumer confidence, brokers say, because of the message they send: people who can choose where to park their cash are spending money on real estate.
“We were not seeing those deals,” said Hall F. Willkie, the president of Brown Harris Stevens. “But the activity is returning.”
Some brokerages say that there are built-in protections from a meaningful housing dip in New York, among them the city’s comparatively low housing inventory. Markets elsewhere are still flooded with inventory, particularly from new developments, but the city’s unsold housing supply has returned to typically low levels, which means that one key to market health — the relationship of supply to demand — isn’t out of kilter.
Dorothy Herman, the president of Prudential Douglas Elliman, said she disagreed with predictions of a weaker 2011, saying she believed the market would very likely be no better or no worse than 2010, but would “move sideways.”