Sales Market Update
The sales market in NYC continues to flourish, except for the high-end luxury market. The second quarter, spring market, is always a busy one for residential sales in Manhattan, so what happened this year compared to last? Although actual closed inventory won’t be published for another month or two, there are some key indicators below to look at regarding inventory and days on the market.
All indices are very consistent with the past two second quarters. This year’s second quarter inventory hit a high point on May 17 with 4762 active listings which was also consistent with the past two spring seasons. If inventory were to hit a much higher number with days on market increasing along with a dip in contract activity then that would show a contracting market. The current pattern of market conditions for low inventory, tight credit, low rates and a booming local economy was established in the first half of the year in 2013. I’m frequently asked when will this end? Rates may rise later this year which could slow the market down but this would only be a minor disruption. What about a major disruption? There has been some recent turmoil across the world with the Asian stock markets plummeting. Although what’s happened across the world hasn’t yet affected US equities, there is a possibility that it will. If so, this could be a major disruption in the NYC residential sales market. The best indicator that will trigger a change in the residential market would be pending sales. Per the chart below, you can see how pending sales almost matched the high and low points of the Dow Jones Industrial Average.
Rental Market Update
Looking at average Manhattan rental prices for June 2015 compared to a year earlier, we saw an increase of 5% (approximately $100/month) for studios with an increase of 3% (approximately $100/month) for one bedrooms. Overall trends for two and three bedrooms are flat compared to the previous year. Developers continue to push pricing in new luxury properties as studio pricing in those buildings rose 12% while one bedroom pricing rose approximately 10% from a year ago.
Although not much has changed over the years in the chart below, it does show a trend that I’ve mentioned numerous times, finding a one bedroom is easier than finding a studio or three bedroom compared to demand of those products. Keep in mind too that many studios are in very high-end buildings and are well above the average price.
