Our residential marketplace set new highs in 2Q2015. Reports from real estate brokerages are trumpeting similar though slightly differing stats, and news agencies have been buzzing with the story because everyone loves to talk and read about real estate. Record levels have been achieved in both average and median sales prices, inventory though up initially last quarter is still stalled at about 20% below the 10 year average—especially for properties under $2M, and trading volume is down.
For the most part, the multiple reports highlight general market trends and provide broad takeaways. For the consumer, the stats alone can be overwhelming and are best evaluated with an experienced agent who can provide contextual background and anecdotal support.
There’s no shortage of data or reports, and no one has a monopoly on obtaining the numbers and sharing the information. Thanks to technology, statistics are collected by every brokerage, every lender, and countless media companies. The myriad of reports provides buyers, sellers and their agents with some of the back up needed to make informed decisions.
Elliman informs us that the average co-op and condo sale price from among 2,674 closed sales in the 2nd quarter is $1,872,367, up 8% from 1Q and 11.4% from a year ago—the highest in their 26 years of data-keeping. They quote a median sale price of $980,000, up 1% from 1Q and up 7.7% from 2Q2014; they count total sales up by 5% from 1Q but down 20% from 2Q2014.
Gregory Heyms of Halstead and Brown Harris Stevens bases his second quarter report on 2,430 apartment sales, 10% fewer than last year’s comparable period. He computes an average co-op and condo sales price of $1,809,146, and a median of $920,700, citing each stat as a new record.
Compass sees an increase in new listings—up 36.1% from 1Q and 4.1% higher than 2Q2014. Interesting in their report is a near parity between co-ops and condos in 2Q2015, observing an inventory comprised of 48.3% co-ops and 46.6% condominiums with 30% of all priced over $3M. Compass’ stats are based on 3,094 closed sales, up 14% from 1Q but down 12.4% from 2Q2014.
Two report chroniclers who collect data on signed contracts rather than on closed sales, Noah Rosenblatt for UrbanDigs and Donna Olshan for the Olshan Luxury Report, lend a more immediate perspective to market conditions, because of the time lag between contract signing and closing which can run as short as 30 days for condo resales, or 90 days or longer for a co-op sales, or up to two years for sales at new developments that have yet to be completed. Rosenblatt collects statistics in real time and offers frequent blog commentary such as “What’s Selling the Fastest?” (His answer for the first half of 2015 is midtown co-ops and downtown condo’s.) Last May, he analyzed 2,435 recorded sales, noting that 12% closed at full asking price, and 24% sold above the asking price. Olshan offers a weekly snapshot of signed contracts for properties over $4M. In the first half of 2015, she counts 751 signed contracts—49 more than in the first six months of 2014 with condo’s outpacing co-ops 484 to 184 with 79 townhouses and 4 condops.
Number Crunching Agents
Agents have an arsenal of statistical reports at their disposal, but to best serve buyers and sellers, it’s essential to break down the macro generalizations and evaluate individual comparable properties more granularly. Numbers tell only part of the story. Each neighborhood and each building has its own contextual history that very often can go counter to general stats. In order to get the best price for a buyer on a purchase or to get the most for a seller on a sale, it’s critical to dig deep into both sold and current comps scrutinizing the history of each listing to weigh condition, monthly carrying charges, pricing history, time on the market and any extenuating circumstances. Calls to listing agents are a frequent part of this process and depend on good co-broker relationships, but that’s a whole other subject for another time.
Despite record breaking sale prices, the reality is that buyers continue to look for value. Overenthusiasm has led some sellers to price aspirationally, missing the opportunity afforded in the first weeks of a well priced new offering. In the current market, the best advice to sellers remains pricing on target to create urgency and multiple interest among buyers, and after 3-4 weeks of marketing, if there are no bids, to make a compelling price adjustment to attract a new buying audience.
There’s no denying the residential market has been changing. Exorbitantly priced luxury condo sales are skewing averages. Homeowners are reluctant to list before identifying their next home exasperating declining inventories. While technology has been a boon to data collection and information sharing, the role of the agent as trusted advisor has never been more important. Today’s agent needs to be a master at crunching the numbers, analyzing and interpreting the stats for homeowners who are often confounded by the variables and differences in reporting and by the disconnect created by splashy media coverage.