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.
- 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.
- 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.
- 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.
- 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.
- 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.