A new year and a new decade! And some good news as we kick off 2020, the real estate market is showing signs of stability. The 2019 market was not easy for anyone as consumers were feeling the effects of tax policy changes in various areas. Read more about that in our September blog.
The Golden Years for New York City Real Estate Sellers
The golden years for sellers of New York City real estate were 2013, 2014 and 2015. Since these peaks, the real estate market has experienced roughly four (4) years of deflation. However, it’s very important to note that the market did not fall off a cliff inasmuch as it was characterized by price point specific downturns. The market is fragmented and the high end (above $5MM) experienced much greater softness than the properties priced at $3MM and below. In summary, the overall market is down 2-4% from its peak.
As a point of reference outlined by Miller Samuel’s Blog: (https://www.millersamuel.com/note/january-3-2019/), It should be noted that only 4.4% of all unit sales in 4Q19 were sold at/above $5 million and therefore unit sales below $5 million accounted for 95.6% of the Manhattan market. Sales above the $5 million threshold fell 37.6% YOY and sales below $5 million rose 1.6%. Two completely different patterns are very apparent. Put another way, 95.6% of the market saw a 1.6% increase in sales and 4.4% of the market saw a 37.6% drop in sales. The real issue to the real estate industry is that the super-luxury prices of the top 4.4% represent a significant dollar volume in the market. Total market volume was $4.4 billion in 4Q19 and the top 4.4% of unit sales accounted for 30% of those total dollars. Based on dollar volume, the drop in high-end sales activity is a big deal and was the biggest driver of the market decline.
The 2020 New York City Real Estate Market
As we enter 2020, there are signs that the market is stabilizing. Although supply is up, pending sales are also up year over year driven by the resale market. Days on market seems to be stabilizing which could suggest that we are becoming more balanced. Monthly contract activity is also up. The market does require realistic pricing by sellers and the willingness to be reasonable.
Buyers are showing up and making appointments to see fairly priced properties. Buyers want to transact in our current interest rate environment to take advantage of historically lows rates. Market conditions suggest this is a good time to transact. If the positive signs continue, the 2020 spring market could demonstrate a market up turn with the rate of demand increasing.
As always, if you have any questions about New York City real estate, contact us anytime!