While there is a strong US equities market, historically low mortgage rates and low unemployment, the NYC residential market contains falling pricing, increasing inventory and numerous price discounts.Multiple industry reports all showed that the number of closed sales dipped by 10 to 14% for the third quarter of 2018 compared to the same period one year earlier. That is now the fourth consecutive quarter that year over year sales have decreased.
In addition, signed contracts for the third quarter in Manhattan represented a low not seen since 2008. The condo market under five million exhibited considerable weakness in signed contracts, which are our best measure with demand.
The other measure of demand is open house attendance. After a spike post-Labor Day, open house averages returned to their weekly average that was seen throughout the spring and summer. Approximately 15 to 20% of open houses have no attendance reported over the last weekends of the third quarter.
A high increase in unsold inventory continues to infiltrate the market. There isn’t enough demand in the marketplace to keep up with up the ever increasing inventory that continues to hit and stay on the market. September 2018 had 2346 new listings which represents the new monthly high for this decade which breaks the previous records established this past spring.
The co-op market in Manhattan continues to show big spikes in inventory compared to one year prior as there were 2939 apartment on the market for the middle of September which compares to 2112 one year prior. Furthermore, the one to two million price point for co-op’s is showing over a 30% inventory jump from the end of the third quarter in 2017.
As a result of this high inventory, during the week after Labor Day, about 800 apartments contained a price decrease, which is the highest amount since 2009. Most neighborhoods in Manhattan feature 25 to 30% of listings that have had at least one price discount.
The entry-level end of the market has continued to soften with more inventory and less demand in the aftermath of the recent new tax law. Since the majority of apartments at this level include financing, sales are falling with rising interest rates. More so the under $1 million price point for co-op’s is showing over a 53% inventory jump from the middle of September compared to one year earlier.
Oversupply of units, decline in foreign buyers, anxiousness for local residents regarding the new tax law, political tensions and a rising interest rate environment are all contributing factors to the current market.
Sellers should avoid attaching a price from the market that existed before the new tax law and skeptical of any broker that is pitching business without 2018 comps. Almost all price points in all neighborhoods are showing a high amount of inventory along with lower contracts signed. Even an appropriate priced listing, may still yield a deal almost 10% below asking price.
Showing Median Listing Discount | Manhattan Overall
Source: UrbanDigs
The market that we have now will continue to be here throughout the rest of 2018 and early 2019 creating opportunities for buyers this fall and winter. Sellers need to price conservatively and expect only a single offer on their apartment in the current environment.
