Thursday, July 17, 2014

The New York and Brooklyn Q2 2014 Market Report is out now!

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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