Numbers tell only part of the story. At the end of each quarter, we’re showered with statistical reports that require us to consider the macro and the micro of our market. Yet each neighborhood and even each building has its own contextual history. To best serve buyers and sellers, agents need to dig deeply into quarterly reports and then plough even deeper into individual comps, examining both sold and current properties to scrutinize every factor that influences a sale including condition, staging, monthly carrying charges, price drops, time on the market and extenuating circumstances.
What is the data telling us?
Below are my takeaways for this last quarter, year over year from Compass Q3 2017 Manhattan Market Report (report available for download below).
The market’s strongest sector comprised condos priced between $1M-$3M and between $3-$5M where the volume of signed contracts increased by 11% and 8% YOY respectively. This is where the most buyers are finding value.
The inventory of available condos for sale exceeds the number of co-op offerings by 22.7%. However, there are more co-op transactions than condo sales.
More contracts were signed for co-ops than for condos in Q3—16.5% more.
More closings occurred for co-ops than for condos—22.4% more.
The price differential is increasing significantly between co-op resales and condo offerings:
The median asking price for a 2BR co-op was $1.550M—60% less than the median asking price of a 2BR condo with an asking of $2.480M.
The median asking price for a 3BR co-op was $2.995M—about 50.5% less than the median price for a 3BR condo priced at $4.512M.
Median closing prices have increased for co-ops and condos but have dropped dramatically for new development.
The median condo closing price increased 3% YOY to $1.7M.
The median co-op closing price increased 7% to $875K.
The median closing price for new development was $2.3M, down 33% from YOY numbers inflated from closings at super towers like 432 Park Avenue.
Time on the market increased by 20% to 60 days from 50 days YOY.
The absorption rate for Q3 in 2017 is nearly the same as last year’s, indicating a stabilizing market where typically 6 to 9 months of supply demonstrates equilibrium.
With so much data at our fingertips, how do you best advise a seller?
In mid-summer I was called to price a prewar 7 on the Upper East Side that had been listed with another agent but failed to attract a buyer. The best way for me to demonstrate that her price had been ambitious was to take a close look at the properties that had competed with hers and analyze every factor. Leveraging my long term relationships with co-brokers, I was able to uncover details that were not readily apparent from listing histories. Together the seller and I reviewed the rival inventory to see which if any properties had gone to contract during the time that she was selling and why. We compared floor plans, considered condition, time on the market and price drops. We scheduled our next meeting after Labor Day when we reviewed the list of 12 comparables which included 3 new offerings, 3 properties back on the market after a summer hiatus, and more importantly 6 price reductions ranging from drops of $55K to $375K. If her property was to attract a buyer, target pricing was the way to go. We recommended bringing in some staging pieces and accessories to give the property heart for a budget well under $5,000. The seller remains unconvinced, and the property is still off the market despite my presentation efforts.
The market trends are clear. As inventory increases, albeit slowly—3% in Q3—and properties stay on the market longer, buyers have more options. Multiple price reductions are occurring with greater frequency. Negotiability is greatest in the super luxury category. The best advice to sellers remains pricing on target to create urgency, and after 4-6 weeks of marketing, if there are no bids, to make a compelling price reduction to capture a new set of buying attention. In a shifting market, sometimes a less than hoped-for selling price, however painful, can be best.
Last year our market was deep in transition in nearly every price category and location. This year it’s more of the same, as buyers gain a more secure foothold and firmer negotiating edge. Last year’s election uncertainties have morphed into political dysfunction and worries globally persist. Prevailing low mortgage rates and increasing new highs for equities provide a favorable backdrop for deal making. 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. In this last quarter of 2017 and into 2018, savvy buyers will be out shopping with their brokers in increasing numbers, taking advantage of substantial price reductions. There’s opportunity for buyers and sellers alike ahead in a more balanced marketplace.