Month: May 2018

Spring 2018 Manhattan Residential Real Estate Instant Market Analysis Part 1: Major Trends Emerging Post-Tax Bill

Eric Mendelsohn

The main market reports that summarize the spring market won’t be out until the first week of July.  Here is a quick and more immediate preview of what is happening in the spring market.

  1. The amount of inventory hitting the market is increasing at a staggering rate. The supply (condos, co-ops, townhouses) of new inventory hitting the market in April was 2265. This amount represents a high this decade for new inventory hitting the market in any particular month. This comes after March 2018 was the previous new high this decade with 2003 condos, co-op’s, and townhouses coming on the market during this timeframe.
  2. While overall inventory has had a sharp increase, the amount of contracts signed is basically flat from a year ago. However, the amount of contracts signed per inventory on the market is hovering around 15%, which means this spring is on a trajectory to be the best spring market for a buyer since 2011.
  3. The December 2017 Tax Bill has been reported to give a big tax break to owners and investors in certain types of businesses. The $10 million plus market had 24 signed contracts for April, which is up from nine one year ago amid a similar amount of supply on the market as last year. In fact, this is the only price point across the board that is more favorable for a seller then one year ago.
  4. The coop market is made up of NYC working class professionals. These are the individuals that are negatively impacted by domestic legislation such as the Tax Bill. The changes in the SALT (State and Local Property Taxes) and Mortgage Interest Deduction along with a rising interest rate environment are clearly having an effect upon the co-op market. In fact, the co-op markets between $1 to $2 million and under $ 1 million are showing a very low amount of contracts signed per inventory on the market. For instance, the $1 to $2 million market is showing approximately 18% contracts signed per inventory on the market, which is down from approximately 40% during the low inventory years of 2013 and 2014. While contracts signed for both of these segments are on par with past years, the issue lies in that too much inventory is being placed on the market with low absorption. For instance, the amount of coop inventory on the market between $1 to $2 million is at 653 listings, which is up from 488 a year earlier. The under $1 million coop market saw a precipitous increase up to 1334 from 835 in April 2017.
  5. Inventory is the best measure of supply, while contracts signed is the best measure of demand. The latest neighborhood trends are astounding. Here’s some of them in the co-op market:

Data from UrbanDigs

Bottom line is there is not enough demand out there to match the rapid increasingly supply, so comps for most segments have no where to go but down.

Six Reasons to Price Right from the Beginning

Eric Mendelsohn

 

The NYC residential real estate market has now entered into a flat/uncertain/declining market depending upon the price, neighborhood and other factors. In this market, buyers move slowly and it is imperative to have a price that is designed to grab interest and invite competitive bids. The price is the most important part of the listing. With that in mind, here are six reasons why it’s important to price a home right from the beginning:

  1. You Will Get a Higher Price– Pricing right from day one frequently results in multiple offers. Numerous data studies show that the longer a home remains on the market, the less money it will fetch when it finally does sell. As days on the market increase, the data shows that the gap between the listing price and sale price has a higher disparity.
  2. Less Time On the Market- The period of best opportunity for the highest offer on your home is within the first four weeks after it is put on the market. The buyers who have been waiting for a home like yours will want to see it right away. The longer your home stays on the market, the worse the offers will be.
  3. Price Reductions Don’t Generate Same Interest as Posting Correctly on Day 1– You only have one shot as a new listing. In addition, the current market is cluttered with daily price reductions. Many buyers may miss your price reduction.
  4. Excitement/Higher Demand– The first few weeks represent the excitement period for a new listing. If a home is worth $490,000 but is priced at $525,000 then you are losing demand and the excitement that comes with pricing it under $500,000. It’s very important to be aware of the key numbers on the search engines. If not, you may miss a segment of buyers. Paying attention to key numbers such as $500,000 or $1,000,000 is very important in the digital age.
  5. Buyers Have Access to the Same Information– Buyers are very sophisticated in the online age. They are aware of the same comps. A home that is overpriced can scare buyers away as they think the seller may be unreasonable.
  6. Leverage– How long has the home been on the market? Buyers ask this question as they want to know the likelihood a seller will negotiate and by how much. The general hypothesis with most buyers is the longer a home is on the market, the most negotiating room there should be. This is why pricing a home correctly from the beginning is so critical.