Month: August 2017

The Increasing Post-Labor Day Uptick In Inventory

Eric Mendelsohn

The past two years have featured an increasing trend of more sales listings in Manhattan being listed in the week following Labor Day than in the previous years. Reasons for this include an increasing trend of sellers pulling their apartments off the market during the summer and then re-listing them right after Labor Day. In addition, more sellers are waiting until after the holiday to post.  The past two years have featured an increase in inventory in the week after the holiday, which was significantly up from the preceding five years.  At some point though, you have to wonder when this trend has gone too far and whether an owner will benefit from listing later in September.

Summer 2017 New York City Residential Real Estate Market Update

Eric Mendelsohn

Mixed Signals

The 2017 spring market was slower than previous years as bidding wars were less common, open house activity was reduced and inventory was staying on the market for a longer period of time. Reasons for the slower demand range from increasing political and economic anxiety to global safety concerns. There are a lot of buyers staying on the sidelines or waiting to upgrade size who feel there is going to be a drop in the market. Overall, the range of number of days on the market for Manhattan listings jumped from 64 at the beginning of April 2016 and 46 at the end of June 2016 to 77 at the start of April 2017 and 57 at the conclusion of June 2017. The increase in the number of days is a clear sign of a slowing market.

Slowing cash sales especially for condos is another sign of a weakening market. The number of cash sales in the condo market dipped below 50% which is well below the 55% to 65% range of the past few years.

While condo supply outweighed co-op supply by a 54 to 46% margin, co-op’s outnumbered condos going into contract by a 57 to 43%. This helps to show that the co-op market held up much steadier then condos throughout the second quarter.

While many price points had a sluggish spring compared to past years the lower end of the market is still very strong. Multiple bid situations are still common on the lower end of the market as 16% of studio sales closed over the listing price this spring. Bidding wars are still in common in Brooklyn for properties under one million. In addition, the Upper East Side had the biggest neighborhood increase this spring with contracts signed having a 12% year over year increase which is primarily attributed to the opening of the second avenue subway.

The Era of Steady Growth in Rental Prices Is On Pause
May and June were key months to indicate how the rental market is headed over the summer. In the spring market, approximately 25% of apartments in Manhattan had a rental concession (which is up from 12.6% a year earlier) but only 6% of the concessions being offered are below 34th street. As shown below, landlords giving away concessions has become a new normal in 2017.

Owners should have an expectation that they are not going to get the rental price that they got one or two years ago as it’s clear that the period of steady growth for owners is in pause for now. We are seeing apartments that rented within a few days in past years take approximately twenty to thirty showings to rent this year. If an owner wants to rent the apartment fast, the owner is much better served to pay the broker’s fee. Renters who see an apartment linger think the price is very negotiable given the soft market. The softness in the market is going to linger for a while as there is a lot of inventory that needs to be absorbed.  The troubles at the high end rental market are inflated in a soft rental market as this sector is down approximately 10 to 15 percent from late 2015. The high-end condo rental market remains very oversupplied with a glut of new inventory entering the market this year.