Manhattan Monthly Market Snapshot - October 2018
October 2018 saw a decline in sales activity as buyers continued to demand steeper discounts which put pressure on sellers to lower prices in an oversupplied market. There were year-over-year declines in pricing and sales for condos while co-ops also experienced a dip in sales activity but saw most pricing metrics increase. Average days on market continued to increase as buyers wait for better deals as evidenced by the increase in negotiability for both product types compared to last year. Listed inventory reached its highest point since October 2011 as supply continues to outpace sales.
Brooklyn Monthly Market Snapshot - October 2018
During October, Brooklyn market indicators weakened, including falling prices and contract activity, lengthening days on market, and expanding inventory. October saw average sale price decrease 13% and median price decrease 2% year-over-year, driven by fewer contracts above $2M compared to October 2017. In fact, areas with historically higher priced inventory including Brooklyn Heights and Park Slope saw far fewer transactions than this same time last year. Fueling the overall price decline was an increase in activity in areas such as Ditmas Park, Prospect Lefferts Gardens, and Flatbush. Overall contract activity was down 11% compared to last year, partially due to inventory constraints at lower price points, but also due to potential buyer’s lower confidence in the market. These same effects pushed days on market 7% higher year-over-year. The 30% additional new listings compared to last year was primarily due to new development introductions, and therefore generally at above average price points.
Manhattan buyers remained cautious during Third Quarter 2018 due to lingering concerns over new tax implications and the continuing belief that prices will reduce further. Despite a healthy economy and a robust stock market, the urgency to buy is diminished unless a property demonstrates clear value. Many buyers are taking a wait-and-see attitude and as a result sales declined and inventory spiked versus Third Quarter 2017. Closings fell 10% year-over-year, but at 3,327 sales were up 5% versus Second Quarter 2018. The annual decline was driven by 8% fewer resale co-op sales and 37% fewer new development closings. Resale condos, however, noted a slight increase in sales, up 2%, as the limited selection of affordable new development options push buyers to the resale market. Another positive sign is a stabilization of sales at the high-end, where price discounts and negotiability are the highest, spurring buyers to finally act. Price statistics exhibited varied signals this quarter as price per square foot statistics declined but average and median price increased. Average and median price per square foot were both down 3%, dipping to levels last seen in Third Quarter 2015. Yet absolute average and median price statistics rose 2% due to an improved market share of apartment sales with two or more bedrooms. This actually drove resale co-op median price to a record high, and resale condo median price to its second highest figure ever.
Following one of the most active quarters’ in recent years, sales activity in Brooklyn varied widely across neighborhoods and product types. Robust activity continued as valueseeking buyers pushed further afield in the borough, yet signs of buyer hesitancy emerged in other areas. Market activity muted in northern and western parts of Brooklyn where prices remain high, and buyers were particularly resistant to purchasing in Williamsburg as the L-train suspension date draws nearer. On the other hand, neighborhoods on the southern and eastern edges of Prospect Park, which offer value relative to the borough-wide price figures, saw a surge in sales at such a rate that inventory could not keep pace.
Brooklyn exhibited varied market signals this quarter as buyers continued to endure supply constraints at lower price points and sellers experienced tempered demand at the high-end. Closed sales reached its second highest figure in a decade, though only half the borough – the less expensive half - experienced increased sales. Contract activity fell 7% annually, hindered by persistently low inventory levels. Meanwhile, price statistics were dictated by high-end buyer hesitancy as well as ongoing geographic shifts in favor of neighborhoods offering value in a price-sensitive climate.
Manhattan market activity cooled in Second Quarter 2018, noting fewer closed sales, more inventory, and steadying prices. At the moment, prospective buyers have a lot to consider, including renewed financial market volatility, the still-fresh implications of tax reform, overwhelmingly high levels of supply, and a belief that prices will fall further. Together, these factors delayed buyers' decision-making, softening market activity versus last year. Despite market factors, signed contracts and sales improved versus last quarter, as buyer demand for Manhattan properties still saw its seasonal uptick in Second Quarter 2018. Closed sales fell 14% annually, but still registered nearly 3,200 transactions. At the same time, about 3,100 contracts were reported signed, down 9% annually. Active inventory expanded 17% year-over-year to approximately 7,500 listings, a dynamic which helped extend the average number of days on market to 121 days, up 13% from this time last year. Price statistics responded to fluctuations in market share by product type and price range. Average price per square foot, at $1,853, was level while average price rose less than 1% year-over-year to $2.151M, an all-time high stoked by record breaking closings Downtown and an uptick in sales over $5,000 per square foot. Meanwhile, median price fell 3% to $1.143M due to an improved market share of sales under $3M as the composition of sales shifted slightly in favor of lower priced resales and fewer new development closings.
Sales activity in Brooklyn remained solid, registering above the five-year average while inventory continued to plummet. The relentless constraint in inventory means many buyers are struggling to find apartments meeting both their price and location criteria, so many buyers took a pause in the First Quarter in hopes of new listings coming on the market in Spring. On the other hand, the more opportunistic purchaser pursued more accessibly priced homes further afield in the borough, which helped to drive contract activity upward. Other potential buyers chose to wait before making a purchase due to continued uncertainty surrounding the effects of tax reform which contributed to a slight decline in overall sales this quarter.
It was a mixed quarter for the Manhattan market with reduced sales, inventory on the rise and price statistics settling down. Many potential buyers took a pause as a variety of factors—concerns over tax reform, luxury market over-supply, stock market fluctuations, even March’s nor’easters—deflated a sense of urgency from the marketplace. However, First Quarter 2018 included bright spots as well: days on market actually dropped slightly, indicating that appropriately priced properties are still finding buyers, while mispriced properties linger.
Manhattan sales cooled versus 2016 as buyers and sellers adjusted to high prices and non-market factors like the Presidential administration and tax reform. Price trends were mixed in 2017. Average price remained level while average price per square foot declined 3% as a result of fewer new development deliveries and sales over $5M. Meanwhile, competition for apartments under $3M caused a 5% increase in median price. Listed inventory rose 9% annually to over 6,000 active listings.
Brooklyn had a record year on many fronts, including alltime high figures for average and median price and the highest number of sales in nine years. Apartment sales overall were 25% higher than last year. Along with robust sales came very low inventory levels, which dropped by 26%, as supply did not keep up with demand. Brooklyn also had a surge in sales over $2M, rising 39% from last year, which fueled record-breaking prices. 2017 marked the third consecutive year of price metrics setting new records.
2017 UBS Global Real Estate Bubble Index
Bubble risk seems greatest in Toronto, where it has increased significantly in the last year. Stockholm, Munich, Vancouver, Sydney, London, and Hong Kong all remain in risk territory, with Amsterdam joining this group after being overvalued last year. Valuations are stretched in Paris, San Francisco, Los Angeles, Zurich, Frankfurt, Tokyo, and Geneva as well. In contrast, property markets in Boston, Singapore, New York, and Milan seem fairly valued, while Chicago remains undervalued, just as it was last year.
Quarter 4 2017 - Brooklyn
The real estate market in Brooklyn closed out 2017 on a high note and sustained the trend of an expanding market. Closed sales however, took a break from the double-digit surge seen earlier this year, as the annual gains were less robust in Fourth Quarter 2017 relative to the first three quarters of the year. For buyers, constrained inventory at all price points was a key factor for lower growth levels this quarter as sellers were unable to keep pace with the strong demand for housing. New development product played a crucial role in spanning the shortfall of resale supply and the market responded favorably with swift sales of new product.
Quarter 4 2017 - Manhattan
2017 ended the year in a more stable condition than 2016, as three of the past four quarters registered level or annual increases in closed sales activity. Fourth Quarter 2017 closed sales were essentially unchanged from last year, and at 3,140 closings, carried the 2017 year-end total to 13,400 closed transactions. Signed contracts fell 14% year-over-year, largely in response to non-market factors like tax reform that are adding complexity to buyer decision making.
Quarter 3 2017 - Brooklyn
This quarter the insatiable demand for home ownership in Brooklyn was confirmed. Buyers not only responded favorably to Brooklyn’s building boom, but the speed at which both new construction and resale apartments were absorbed this quarter was striking. Third Quarter 2017 proved to be the strongest quarter for closings since 2008. Buyers continued to expand their neighborhood selections at various price segments of the market. The $1,000,000 to $2,000,000 price range claimed more sales than any other prior quarter, as did sales in the $500,000 to $750,000 as new offerings in South Brooklyn motivated buyers. Sellers have struggled to keep up with the pace and consequently, there were large declines in inventory throughout all of 2017.
Quarter 3 2017 - Manhattan
The Manhattan market has now experienced two consecutive quarters of annual growth in closed sales as a result of improved contract activity during first six months of 2017 versus 2016. In Third Quarter 2017, the Manhattan market saw closings rise by 3% year-over-year to 3,703 sales, primarily due to strong performances in the new development and resale co-op markets. Signed contracts fell by 4% yearover-year, to 2,468 contracts signed. An undersupplied co-op market, delayed new development launches, adjustments in foreign capital controls, and the lack of lower-priced inventory in the resale condo market have affected marketwide absorption.
Quarter 2 2017 - Brooklyn
Brooklyn’s second quarter maintained the pace set at the start of 2017 and improved on the sales activity recorded in Second Quarter 2016. Challenged by limited resale inventory, buyers turned to new development properties in numbers significant enough to boost marketwide sales and prices overall. But more aggressive pricing and the lack of low-priced inventory also generated some buyer resistance; the average days on market increased by two weeks compared to a year ago.
Quarter 2 2017 - Manhattan
Second Quarter 2017 closed sales increased by 2% year-over-year, the first increase in closed sales since Fourth Quarter 2015. With the increase in closed sales also came record high price figures that surpassed previous records set in First Quarter 2016. In addition to being up 2% year-overyear, closed sales rose 31% versus First Quarter 2017. Resale co-op and new development sales drove the increase, with closed sales rising year-over-year by 8% and 2%, respectively.
Quarter 1 2017 - Manhattan
The first quarter often sets the tone for the rest of the year and this quarter proved the Manhattan market is off to a positive start in 2017. Contract activity increased year-over-year for the first time in six quarters, registering a 3% increase versus First Quarter 2016 and a 5% increase versus last quarter.
Quarter 1 2017 - Brooklyn
Springtime came early to Brooklyn as First Quarter was the strongest first quarter in six years in terms of sales. Improved consumer sentiment and the expectation of rising interest rates on the horizon motivated buyers. This quarter also continued the streak of year-over-year price gains seen throughout all of 2015 and 2016. Demand for new developments, particularly larger residences at price points rarely offered in Manhattan, drove overall prices higher.
2016 Manhattan Year End Review
Manhattan residential real estate saw a mixed market in 2016. While closings were down 11% year-over-year, average price per square foot, average price, and median price all reached record highs for the second year in a row. Average price per square foot in 2016 was up 12% year-over-year to $1,841, average price increased 12% to $2.045M, and median price increased 11% to $1.100M. Overall inventory continued to rise versus 2015, up by 16%.
2016 Brooklyn Year End Review
Brooklyn’s performance this year was solid despite lower sales and constricted inventory in lower price points. Record prices were set this year, mainly due to a surge in sales over $2MM and growth in new development sales. While apartment sales overall were down 14% versus last year, closings over $2MM were up 39%. Average price was 16% higher than a year ago and average price per square foot grew 10% to $884 per square foot. This year, median price finally surpassed its previous high set in 2008.
2016 ended much as it began – with a variety of mixed signals indicative of shifting market conditions. Average price per square foot was up 6% year-over-year. But its 1% quarter-over-quarter change reflects the steadying of price per square foot since the beginning of the year.
Prices are high, but past the peak. Prices were up versus last year, and still occupy near-record levels. The median price in Manhattan is $1.1 million (up 10% vs a year ago) and the median price per square foot is $1,314 (up 2% vs the same period). But it now appears that First Quarter 2016 will be the peak moment of the post-2009 growth period, as the Third Quarter marked the second straight quarter of stagnant or lower prices in most categories.
Prices coming under pressure. Though still at near-record levels, the average sale price in Manhattan retreated 6% from the $2.12 million high-water mark it achieved in the First Quarter. Across the board, prices were up versus Q2 15, but were slightly lower or unchanged versus Q1 16. New development condos and re-sale co-ops both rose in value thanks to their tight inventory, but re-sale condominiums contracted 5% in average price per square foot.
New record prices. For the first time ever, the average sale price in Manhattan surpassed $2 million thanks to significant high-end sales. The median price reached $1,160,000 (up 22%), and the median price per square foot $1,374 (up 11%). Fewer closings and fewer contracts. The pace of sales is slowing appreciably. There were 5% fewer closings this quarter versus the same time last year, and 11% fewer signed contracts.
2015 Manhattan Year End Review
Manhattan residential real estate had a robust year in 2015. Closings were up year-over-year and average price per square foot, average price, and median price all reached record highs. Average price per square foot in 2015 was up 5% year-over-year to $1,645, average price increased 6% to $1.787M, and median price increased 8% to $990K. Overall condo inventory steadily increased during the year as a result of new development introductions, but co-op inventory reached a near record low.
2015 Brooklyn Year End Review
Brooklyn has had a continued streak of increasing sales, improving year after year since 2012. Demand was remarkably strong in Brooklyn, record high prices were achieved and inventory this year was overall higher than last year. Average price was 10% higher than a year ago and average price per square foot grew 13% to $805 per square foot. While the number of listed apartments exceeded 2,000 in three out of four quarters during 2015, rebounding from the historic low in 2013, inventory was still nearly 32% lower than levels reached in 2011. With the rise in new development introductions, total condo listings have grown and now represent more than half of all inventory.