Market Report

Frederick Peters
President, Coldwell Banker Warburg

2016 First Quarter Market Review

As we wrap up the first quarter of 2016, the headlines are all abuzz with tales of market woe. “Is The Boom Over?” “This Real Estate Market Is About To Crash.” The market is so divided that such questions remain impossible to answer accurately. The boom in high-priced newly built condos appears to be over. The boom in one-bedroom apartments in Brooklyn continues unabated. In a market in which the pace can change over the course of a month, closed sales, the contracts of which have been signed anywhere from two months (for some resales) to several years (for new developments), don’t represent up-to-date information with which to judge the direction of the market. We have to look at contracts signed and on the ground reports from our agents to get the latest story.   

Weakness pervades the top-end of the market. While there have been luxury condominium trades in the ultra-luxury sector, they are few and far between. Many of the properties available have lingered six, nine, twelve months on the market. Developers, who are notoriously reluctant to reduce their prices, offer incentives to the brokerage community and make deals behind closed doors in which they make concessions which are, they hope, not too visible in the final selling price. As more inventory hits the market over the next six to twelve months, some of these issues will only get worse. What the market really needs, two and three-bedroom apartments at real-life prices, don’t appear anywhere, victim in most cases to the extraordinary prices paid for the land before the process of building, expensive in and of itself, even began.

Condo Days on Market 1-2M

Condo Days on Market >10M

Charts by Urban Digs

Meanwhile, the marketplace of properties bought by real New Yorkers continues to show stability. While trading was slower during the first two months of the year, March has seen an uptick in absorption; with little property coming onto the market, this has led to a shortage in numerous submarkets. Well-priced six and seven room apartments on both the Upper East and Upper West Sides are in short supply, and while it is now more the exception than the rule that properties are snapped up during the first open house, many receive offers at acceptable prices during the first few weeks. And the smaller the unit, the greater the demand. Properties properly priced under $2,000,000 still excite 50 to 100 visitors at the first open house. Buyers still risk losing one deal after another unless they act aggressively. The pace of the market overall is slower, but acute inventory shortage still drive submarkets across Manhattan’s tonier neighborhoods. 

In Brooklyn competition remains even more acute. Buyers in the one and two bedroom market in such up-and-coming neighborhoods as Prospect Heights and Bedford Stuyvesant report two phenomena: properly priced apartments go immediately into competitive bidding, while overly ambitious sellers sit with their units until the prices are lowered, at which point they move right out the door. Buyers in search of space and value are pushing deeper into the borough, to such areas as Ditmas Park (stunningly pretty, like a tiny suburb in the middle of New York) and Prospect-Lefferts Gardens, with its blocks of landmarked Victorian and Edwardian limestone houses. Other buyers travel one stop east from 59th Street to Long Island City, where luxury condominiums spring up everywhere and prices are soaring.      

Co-op prices, held back by restrictive financing rules and even stricter Boards, lag ever further behind new condominium prices; they represent, at this point, the best values in the city. A co-op in need of renovation east of Third Avenue on Manhattan’s Upper East Side offers more bang for the buck than a similarly sized condo in the East Village, on the Lower East Side, or in most neighborhoods in brownstone Brooklyn. The value propositions in the city have radically realigned towards the south; Tribeca now holds the title of New York’s most expensive zip code. First, Second, and Third Avenues north of 59th Street now offer some of the best values in the whole city.

Pending Sales 1q

Chart by Urban Digs

Overall, even though sales have regained momentum in the past month, the overall feeling of the real estate market is distinctly cooler than at this time last year. Global economic woes and local stock market fluctuations have taken their toll on consumer confidence. Buyers don’t offer on overpriced listings, frustrating though many sellers find this. Prices must be right on the mark to attract buyer interest; even a tad too high and offers simply are not forthcoming. Demand still outstrips supply in many of the market segments not covered by the press, who seem interested only in the top 5% of the market. But prices for new deals are either holding steady or slightly down from last year’s levels. Only time will tell what the oft-celebrated spring market will bring! 


Additional Reports




2024
Q4 2023

2023
Q3 2023
Q2 2023
Q1 2023

2022
Q4 2022
Q3 2022
Q2 2022
Q1 2022

2021
Q4 2021
Q3 2021

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