A Tale of Two Different Seasons in One
The fourth quarter market in New York featured two different seasons in one. Before the US presidential election, all price points were experiencing softness. In the four weeks leading up to the election, 677 contracts were signed which represented a decrease of 33% compared to this period in 2015. Then in the four weeks following the election, 837 contracts were signed which represented a decrease of 5% compared to this time-frame in 2015.
Overall there has been a tremendous post-election increase in activity, giving the market great momentum heading into 2017 with the recent uptick in the US equities market. Buyer uncertainty has receded in the last six weeks of the year and there is a level of transaction activity that hasn’t been seen since the spring. Many properties reduced prices during the soft fall and after many months on the market it became common for a languishing property to receive bids during the last six weeks of the year, as open houses that were empty in October had a noticeable uptick in final six weeks of 2016. A tighter connection between sellers and current market conditions emerged during this period. The chart below shows that December was quite active with listings going into contract compared to October and November, as this year there was not a big decrease for December compared to previous years.
Source: Urban Digs
Looking ahead to 2017, rates are expected to continue rising in the second half of the year, which will impact demand for first-time home buyer properties, but mortgage credit will likely be more available due to looser lending standards and will help to offset the loss of demand in this segment. While there is a wild card with a new presidential administration, the sale of properly priced property should remain very strong in the first half of the year.
Overall Softness Not Seen in Years
The rental market usually responds favorably to a soft sales market, but that was not the case this quarter. All price points exhibited weakness. While overpricing and supply continued to be felt in the luxury market, even the non-luxury market was affected by these factors. This past fall it was common to hear of luxury rentals that were signing leases at 10 to 20% less than two years earlier. In addition, an incoming glut of luxury apartments will force more landlords and apartment owners to offer concessions and cut prices in 2017. The amount of concessions offered this past fall (which show softness in the market) was the highest since fall 2009. The number of concessions doubled this past fall compared to fall 2015.
