We’re at an interesting moment of time in the current residential marketplace. On the one hand, an already thinning inventory of apartments has been shrinking steadily since the second quarter of this year.  According to analytics provided by Noah Rosenblatt’s www.urbandigs.com, as of this writing, a total of 5,659 apartments are on the market in Manhattan—the lowest number in more than four years.  At the same time, there are 3,012 pending sales—just 189 deals short of the highest number of signed contracts achieved during this same period on June 14th of this year.  Properties in all price ranges are being absorbed at a faster rate than new properties are coming to market.  With supply dwindling and demand rising, sellers who price realistically have the edge today.  


In Manhattan, the real estate market continues to demonstrate an inherent strength and relative balance despite negative macro economics.  Europe’s debt problems will not stabilize any time soon, and they are as disconcerting as they are distracting.  Worrisome too is the future of China—the proverbial elephant in the room.  Our own U.S. stock market confounds us with its volatile swings.  In New York, while job creation is up 2.9% for the first half of this year, especially in tourist-driven hospitality and retail, unemployment still hovers at 10%. At the market’s upper end where demand exceeds supply, a remarkably buoyant audience of buyers is setting all time records.  Several highly publicized transactions have achieved eye-popping numbers, and not all have been bought with foreign money.  This past February, a Russian industrialist purchased the penthouse at 15 Central Park West for $88M, and international capital is rumored also to be behind two recent $90+ contracts at One 57.  Not so at Ritz Carlton Towers where Steve Wynn paid $70 million for the penthouse in June; the Courtney Ross’ duplex at 740 Park was purchased for $52.5M in May by a couple relocating from California; a business woman from Connecticut bought the Ted Forstman estate at 2 East 70th for $40M in June.  Adding up the trades for this category in the last six months, 19 additional properties over $20M and 32 homes priced between $10M and $19.5M have closed. At the opposite end, there is high volume and strong velocity in the market below $2M which is thriving for two reasons mainly.  Consistently high priced rentals are driving first time buyers to capture historically low mortgage rates.  As of July 26th, Freddie Mac reported average 30 year rates at 3.49% and 15 year rates at 2.80%—the lowest in history.  These are not expected to rise significantly for the remainder of 2012.


There is a marked difference in the buying patterns of the middle market, very loosely defined as everything between $2—9M.  Once dominated by Wall Streeters with frothy bonus checks, these buyers are more conservative than their predecessors, and their ranks comprise far fewer financial professionals (with the exception of hedge funders) and more real estate developers, entrepreneurs, attorneys and surgeons.  In this category where housing stock is particularly short, when a well priced resale is listed, generally it sells within three months, if not sooner, and frequently in competitive bidding.


In this climate of tight inventory, there is broad demand from four distinct groups:  overseas buyers seeking a safe haven, wealthy U.S. citizens looking for a trophy home, New Yorkers trading up or down, and out-of-towners desiring a piece of the Big Apple.  The environment seems favorable for new development projects which are making a timely comeback.  Scores of new condominium ventures are rising once again in all areas of the city after a virtual four year hiatus.  Stalled projects have been recapitalized, and commercial investments have rebounded with multiple high end developments in the ground alongside up market rental conversions.  This current wave of development will not only boost inventory levels for new properties, but will undoubtedly lead to increased numbers of resale apartments.  Typically, as confidence spreads, more sellers list their homes, and nearly always, the power of the market moves from the top down. Many of the new condo ventures are trending to larger spaces with ambitious prices for the ultra luxury market.  On the Upper East Side in a 19 block span from 60th—79th Streets, Park to Lexington Avenues, there are at least seven high profile projects that will offer mostly large apartments for about $3,000 per square foot.  Creating more choices for buyers, these shiny brand new offerings will bring renewed energy to the marketplace. We’ll have to wait to see whether these developers will hit their impressive numbers.


There is every reason to believe that the market in Manhattan will remain stable for the foreseeable future. Despite global and U.S. economic troubles, demand for quality homes in our city at this point in time is high enough to balance a tight housing stock, favoring sellers who prices their properties realistically and market intelligently.