With very low demand from foreign buyers, the strength of the market continues to be with co-op’s in the entry- and mid-level markets. Buyers that are planning on owning for many years see value in the co-op market. In addition, another selling point for co-op’s over condo’s is that many buyers want to complete their own renovations and upgrades. These listings are predominantly contained to co-op’s.
This summer featured higher inventory levels than in previous years as more properties did not sell during the spring market. At the end of the third quarter, Manhattan had 5,672 active listings which is the highest amount since early July 2012. With so much inventory, it’s super important to be priced right from the beginning. Owners have only one chance as a new listing when the exposure is maximized. With more inventory and a softer market overall, the trend of the amount of sales sold over listing pricing decreased during the third quarter of 2017 from 17.9% in 2016 to 13.2% this year.
Courtesy of Miller Samuel Inc.
The third quarter is always the sweet spot for the rental market as it encompasses the summer market when demand is at its peak. It’s a renter’s market that hasn’t been seen since the aftermath of the last recession. According to Miller Samuel, newly signed leases dropped by 11% for September. The newly signed leases number decreasing is a sign of a soft September rental market.
Courtesy of Miller Samuel Inc.
Renters have adjusted to a reality of expecting landlord concessions. Miller Samuel stated that 27 percent of all new leases signed in September had a concession which is about double from one year ago. The biggest increase in concessions took place in Queens with 42.8% of apartments offering concessions which is up from 11.7% last year. The effectiveness of paying broker fees and offering a free of month or two while keeping rents stable is fading as the vacancy rate continues to rise and rose to 2.63% in September. More owners are adjusting to a 36x income requirement for applicants compared to the standard of 40x. In addition, more owners are changing to friendlier pet policies.
The luxury rental market, defined as $6,500 and above continues to experience oversupply. Owners should expect a decrease of 10 to 15% in monthly rent for a luxury rental that they own. A condo investor’s return will continue to push lower with another 15,000 market rate apartments hitting the rental market in 2018 which is primarily contained to the luxury market.