Manhattan Monthly Market Snapshot - May 2018
There was a divergence in May sales activity between condos and co-ops, as contracts signed fell for condos but rose for co-ops. Pricing metrics for condos were down across the board, with median sale price dropping considerably more than average price, off unusually high figures last year. Alternatively, co-op pricing metrics rose over the last year, with average and median price up by double-digits. Listed inventory continued to rise, with total inventory again reaching recent highs, up 22% across all product types. With a total of 8,489 listed units, inventory surpassed last month’s figure, and rose to its highest level since November 2011. Days on market rose for both product types, although a steeper rise was seen in the condo market. Negotiability remained high, with the difference from last ask to sale for both product types greater than a year ago.
Brooklyn Monthly Market Snapshot - May 2018
Spring finally arrived and robust contract activity reflected buyer enthusiasm in Brooklyn. During May, the Brooklyn market experienced an increase in contracts signed, up 7% versus last year, driven by significant new development sales at Brooklyn Point, Austin Nichols House and 2449 Ocean Avenue. Brooklyn’s price metrics improved compared to last year due to an uptick in new development sales in Prospect Park South as well as in other boroughs north of South Brooklyn. Significant increases in sales over $2M drove both the average sale price and price per square foot up for the fourth consecutive month, up 5% and 10% year-over-year, respectively. However, median sale price decreased 4% as market share of sales shifted towards smaller residences compared to May 2017. The difference from last ask price to sale price was 0.4% below the average asking price, nearly level when compared to last year. The average days on market figure of 68 was skewed by several homes selling after sitting on the market for over two years.
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.