The 2017 Sales Market: Manhattan & BK
Sales activity in Manhattan during the second quarter of 2017 saw a promising up-tick, especially in the luxury market, compared to the first quarter of the year. Equity markets, which are typically highly correlated with luxury residential sales in New York City, have plateaued near all-time highs and interest rates remain suppressed despite three interest rate hikes from the Federal Reserve since December 2016. This macroeconomic environment is likely contributing to relative renewed strength in the high end of the market.
The median closing price for a new development condo in Manhattan was $3.1M in the second quarter, up 9% compared to the second quarter of 2016. Notably, the Downtown market recorded a 49% year-over-year increase in its median new development closing price as projects such as 56 Leonard and 30 Park Place experienced high closing price points. Resale co-ops were strong in the Upper West Side, Upper Manhattan, and FiDi & BPC markets as median prices increased 12%, 9%, and 4%, respectively. In fact, the median asking price of co-op inventory increased a substantial 10% year-over-year to reach the highest median asking price recorded: $1.1M. The re-sale condo median price was also up 7% compared to the second quarter last year, as gains in Upper Manhattan (+26% Y-o-Y) and FiDi & BPC (+9% Y-o-Y) offset declines on the Upper East Side (-14% Y-o-Y).
Brooklyn’s second quarter also maintained the pace set at the start of 2017 - with resale inventory down significantly and demand up, competition in the market has been fierce. Challenged by limited resale inventory, buyers have finally begun to turn to new development properties in higher numbers than earlier this year - enough to significantly boost both market- wide number of sales and overall sale prices.
There were 17% more sales in Q2 2017 than Q2 2016, however, this increase was due almost entirely to closings in new developments. While the number of large- scale development properties that commenced closings this quarter doubled compared to Q2 2016, overall closings were up only 17%, meaning the number resale closings this quarter were down over 30%! The often higher price tags found in new developments has also generated some buyer resistance; the average days on market has increased by two weeks compared to the same quarter last year.
Since Third Quarter 2014, inventory rose during nine out of ten quarters prior to 2017. However, so far in 2017 buyers in Brooklyn have experienced notably constricted inventory, particularly at the low-end and in the resale co-op market. The year-over- year inventory decrease accelerated further during Second Quarter 2017, declining 23% versus the same period a year ago despite the fact that new development inventory actually grew compared to this time last year.
In order to meet the demand for home-ownership in Brooklyn, new development properties are becoming more common in neighborhoods that historically did not offer much in the way of new product. New development listings increased 22% from a year ago yet not by nearly enough to boost the market wide inventory figure. Market share of listings priced under $750,000 shrank versus last year, a trend seen in Brooklyn during the past several quarters. During Second Quarter 2017, apartments priced over $2M was the only price category to have an increase in number of listings compared to a year ago.
2017 has also been a strong year for the Brooklyn Market in terms of pricing. Median sale price climbed 27% year-over-year to $760,000, topping last quarter’s high by an additional 9%. Average and median price grew year-over-year to register the fourth consecutive quarter of double-digit growth. In fact, overall average and median price rose year-over-year in every Brooklyn submarket. Historically low inventory levels, high buyer demand, and an increase in new development sales all contributed to strong pricing this quarter. This quarter’s median price reached $760,000, 27% above last year’s figure and surpassed last quarter’s record high figure by 9%. Average and median price per square foot figures both increased year-over-year but did back off slightly from last quarter’s record highs by 7% and 10%, respectively.
My team works with a large number of buyers, and almost every one of them looking in Brooklyn this year have been involved in bidding wars and experienced first hand the competitive marketplace these numbers demonstrate. Competitively priced properties, especially in the most "popular" neighborhoods in Brownstone Brooklyn (Park Slope, Cobble Hill, Boerum Hill, Carroll Gardens, Brooklyn Heights, Prospect Heights, Clinton Hill & Fort Greene) have been selling for 5-10% over-ask with multiple offers. Two buyers of mine recently bid on a property that ended up with 17 offers! As a buyer in this kind of market, it is vital to be well represented by an agent who can advise you on how to craft the most competitive offer possible when bidding on a desirable property. As a seller, competitive pricing is still key to garnering interest. While properly priced listings are moving quickly, and have been selling as much as 10% over-ask, aspirationally priced listings continue to produce minimal activity, despite record high levels of demand in the marketplace.