The 2018 residential market ended the year with a complete reset of conditions compared to a year earlier. The chart below shows the complete change in conditions with inventory increasing by 23% in 2018, while the number of contracts being signed had a 7.4% year over year decrease. Nowhere is the shifting dynamics more apparent than the average days on the market starting 2019 at 90 days when compared to 69 days one year earlier.
This is a buyers’ market at all price points. Pricing has fallen by approximately 10% in the past ten months alone. Due to a shift in the market with few bidding wars, high supply and low demand, buyers do not face a sense of urgency in the current marketplace.
Stricter co-ops are really suffering in this market with a very high amount of supply and younger buyers opting for condos over coops due to the strict rules of co-ops such as sub-leasing and renovation policies.
Sellers need to avoid saying we need X price in this market and exhibit patience. When listing their apartment, sellers need to question real estate brokers who are not using comps from the past few months. Pricing dynamics have shifted so much in the past year that even comps from the first half of 2018 are outdated. Pinpoint pricing is necessary for a successful outcome in this market along with sellers presenting the apartment in a favorable way. Whether it needs a fresh coat of paint, re-polishing the floors or staging, only an apartment with the proper presentation and price will sell in this market.
The chart below shows how critical it is to price your listing right from day one. If your property has been on the market for over 90 days, you are only likely to sell at a price that is far removed from the asking price. Once the property has been on the market for over 90 days, sellers should expect offers at 10% less than the asking price.
The Long Island City Market is one of the few bright spots in the market due to the November announcement of Amazon opening up their second headquarters that will bring approximately 25,000 new jobs to the area with an average income of $150k. Pricing is up by approximately 5% in Long Island City since the Amazon news came out.
In addition, the halting of the 24/7 L Train Shutdown provides a bright spot for listings in Williamsburg and Bushwick as we start 2019.
While the macros of the economic environment and low unemployment are still favorable, the market we have now will be with us until at least the end of the tax season.
One thing is crystal clear as we enter 2019- the opportunity for buyers in 2019 awaits.
The rental market remains stuck in neutral. Although certain aspects of the market have benefited from local residents choosing to rent instead of buy, there is still a high amount of new apartments hitting the market which means a continued stay on the market of concessions. Renters still expect concessions in the market with a free month of rent or the owner paying the broker fee as 41% of apartments late in the year contained a concession according to Miller Samuel Inc.