Last week The Real Estate Board of New York released its “First Quarter 2018 NYC Residential Sales Report,” showing mostly double-digit declines in both sales price and sales volume. This was the third consecutive quarter for year-over-year dips—something that hasn’t happened since 3Q2009 which was the nadir of the residential market. In a 35-year career, I’ve worked up markets, down markets and everything in between and can say unequivocally, each market presents challenges and opportunities for buyers and sellers.
If you are not a lover of data, please skip to my conclusion or stay with me to consider my key takeaways from REBNY’s 50-page report comparing 1Q2018 to last year’s first quarter.
- Amid citywide declines, total monetary value for closed transactions dropped 16%, nearly $2B less than last year.
- In Manhattan, total consideration dropped 30%.
- The total number of home sales (including condos, co-ops and townhouses) fell 20% in Manhattan.
- Properties priced above $5M declined the most by 37%.
- Properties priced between $500K-$3M fell only 3%.
- The average sales price of a Manhattan home (including all categories) dropped 11% to $1.907M.
- The average sales price of a Manhattan condo fell 17% to $2.508M, but the average PPSF remained virtually unchanged from $1,724 to $1,718 while the number of sales dropped 27% from 1,384 to 1,016 closed transactions.
- The average sales price of a Manhattan co-op increased 11% to $1.308M while the number of co-op transactions fell 15% from 1,603 to 1,363 trades.
- The average sales price of a Manhattan townhouse dropped 9%, and the number of townhouse sales dropped 19%.
- There were 39 townhouse sales in Manhattan with the highest on the Upper East Side ($39M for 16 East 69th Street) and the lowest in Washington Heights ($750,500 for 912 St Nicholas Avenue).
- On the Upper East Side, the number of co-op sales decreased by 11%, and the average price of an UES co-op increased by 11% to $1.662M.
Six months ago, I asked in these pages, “Is a Buyer’s Market Brewing?” The answer then and now is decidedly “YES!” A softening began at least two years ago in the top segment of the market when overbuilt and overvalued new development condos glutted inventory. Prices had escalated too high and too quickly, and by 2015 they had plateaued. Last year the pendulum swung away from sellers to favor buyers. The pace of trading slowed even though owners reduced prices multiple times, and developers offered significant and numerous concessions.
While handfuls of trophy apartments continue to sell at a premium, the exuberance that defined 2015 has evaporated. In an industry wide showcase sponsored by The Real Deal, five brokerage heads discussed “Residential’s Silver Linings Playbook” and agreed that amid heavy discounting, deals were getting done at corrected prices especially in the market’s under $5M sweet spot.
If you’re thinking about buying, the advice is to dive in this spring to explore the increasing options and take advantage of a firmer negotiating edge. If you’re trading up, this is the market to identify your larger home as the spread in a soft market is smaller than in a stronger market. If you’re trading down, you can still benefit from tax advantages before they sunset in 2025.
If you’re thinking about selling, the recommendation is to price realistically to create urgency and capture early buyer attention. Savvy buyers and their brokers will be out shopping for value. Don’t miss the spring and summer buying seasons of 2018!