With current inventory at near all-time lows (as of the time this is being written, there are fewer than 6,000 units on the market. We typically average around 12,000 units on the market at any given time.
Anyone who has been following the market for some time (5+ years) will not be surprised to know the current market state (very robust) nor the fact that the market is very both seasonally and economically cyclical.
First the current market. I have been saying for the past six months that the overall Manhattan real estate market is strengthening, and all the latest data just confirms this reality. Just go to the first open house for a new listing. It will lilkely be their only open house. If priced right, new listings are garnering mulitple bids, many over the asking price, and many all-cash with no contingencies. Wow! What a difference a year can make. So, prices are up (as much as 20% from the 2009 lows), inventory is way down and confidence in the housing sector has surged.
The segment of our market with the most dramatic change, at present, is the market consisting of homes of at least two bedrooms and two full bathrooms in just about any neighborhood in Manhattan. Since many apartments were converted into smaller studios and one-bedrooms to reflect the demographic shift in the 70’s & 80’s when families moved to the suburbs, the city now has many small apartments and very few big ones. To add to the problem most new construction is heavily focused on the very high-end buyer, leaving very few options for middle-class families.
The market is crazy at the moment. I have had clients lose a number of “bidding wars”. I have also had clients who have won their “bidding war”. When my clients and I visit an Open House, it is not uncommon for us to have to wait to get into the apartment while people ahead of us are leaving the apartment – to make room for others to enter. I have been dealing with buyers who are frustrated with the lack of new homes coming to market. The market is now, clearly, better for sellers than at any point since 2007.
Counter to what one might think, despite the “seller’s market” most buyers are concerned that if they don’t get in now they will miss the opportunity and not have the equity needed to purchase in the future. Most buyers who require financing are wondering how long rates will stay this low for mortgages. My crystal ball broke in 2008!
Did I also mention seasonality above? Spring is here, and that typically means more buyers, more inventory, and a run up to the Summer months. Well, the buyers are here, but the new inventory is not. The simple rule of supply and demand tells us that prices will continue to rise a bit, until inventory (supply) catches up to demand.
In case you are woindering what a typical cycle is in Manhattan: The 1st Sunday of the new year (January) hits and suddenly people start to think about their housing situation and how this year they are going to sort things out. What should we do? Let’s stop paying rent and look to buy. Web traffic to our listings jumps dramatically in early January (versus where it was from Columbus Day to New Years). The talk about annual bonuses enters the fray, usually further fueling the housing market (or at least a segment or two of the market). The market activity builds and builds over the first few months of the year as new inventory comes on from sellers who waited and buyers are out in force. This culminates in the strongest period for (closed) sales volume which is April, May and June. Being driven by warmer weather, approaching the end of a school year, and people motivated to sell and buy before the next school year, the Manhattan housing market is typically giddy at this point. Normally, the Spring market slows down drasticaly by 4th of July weekend. Unlike other places, the NY summer market is much slower than the Spring market with people away or otherwise pre-occupied. Things then tend to pick up again from Labor Day to Columbus Day, or Thanksgiving if the weather remains nice.
I did say that the market is also affected by economics, too. Low interest rates and local employment numbers effect the market. In general, economics it is driven by the laws of supply and demand. At present, we have a decreasing supply of apartments and demand increasing. In large part (a couple of) years of pent up demand, low mortgage rates / cost to finance, and a huge increase in buyer confidence are driving the market, upward.
Suffice to say: We need apartments to sell. I have sold all of my listings and am eager for new ones to help satisfy market demand. Can you think of anyone you know who may be interested in selling their home? Please refer them me so I can help them save time, net more money and reduce the stress of the process.
Lee can be reached at (347)829-9996.