Good
Morning!
High prices and low supply continued to be the story of the
Manhattan real estate market in the second quarter. Though things have slowed
down quite a bit from the torrid pace of the last year, we still saw the number
of sales rise for the seventh straight quarter.
A few key themes in the market over the past 90 days are:
·
Low Inventory – supply remains low, but is
improving
·
Sales Slowed – primarily due to high prices
but also lower supply means there are less properties to sell
·
Luxury Apartments and Condos are Driving
Prices – the bulk
of sales are not in this segment, but a $70 million 5th Ave
apartment and a $26 million doorman-less co-op in SoHo will skew numbers
According to New York
Magazine, inventory was still a problem despite the number of listings
increasing by 18 percent as the real number remains a relatively low 5,659
properties. There still plenty of
activity in the market, but there has been a little bit of a slowdown as
activity is not increasing at the same rate that it was over the last year.
Buyers reportedly continue to struggle with bidding wars as 45.9
percent of listings found takers at or above the asking price, the largest
market share in the past six years.
But sales do look promising as supply continues to rise. As more people put their homes on the market
looking to fetch peak prices, costs will begin to go down as that supply goes
up. There is also the expected increase
of luxury condos hitting the market at the same time in Midtown with
approximately 750 units headed that way. However, for the time being, with the
average home price currently at a record $1.7 million, buyers are showing some
resistance and restraint when making purchases, especially when we look at
properties in the $5-$10 million range. There,
we are seeing properties more stagnant and on the market for longer periods of
time. All factors that will contribute
to reining in prices.
Crain’s New York Business had similar reports showing the
pace of sales in the second quarter slowing significantly due to the sharp
price increase. The median sale price of a Manhattan condo was $910,000 this
quarter - a 5.2% increase since last year.
The condos that are being built are commonly luxury or
ultra-luxury, affording developers the ability to make their money back at a
steep price point- essentially causing the median average prices to climb.
According to the Wall
Street Journal, condo prices have dropped below the record prices set
during Q1 possibly due to a lull in new development completions. Brokers and
developers fear the likelihood that buyers are beginning to resist the sky-high
prices. Prudence on the part of buyers can be seen in other portions of the market as
well as typically tepid co-op numbers far outpaced condos in terms of the
growth of both median sale price—which was $725,000 for the second quarter—and
sales volume.
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