NYC Real Estate Market Opportunity

This is the most enthusiastic we have been about the opportunity in the market in many years! All signs point to NYC being at the bottom in this current cycle, the market is starting to move upwards. It’s easy to see in the anecdotal evidence, increased urgency from buyers, more showing requests, more multiple offer deals and more eager sellers. Consumer confidence has increased dramatically based on a number of factors: good news about the virus and potential end in sight, people continuing to return to NYC, the promise of increased federal stimulus, remarkably low interest rates, much of the uncertainly regarding the election behind us and strong performance of the stock market. We have put together some hard data to demonstrate what we are seeing in the trenches. 

Weekly pending sales, which is the strongest indicator in regards to demand, has reached pre Covid levels. This is especially telling as historically right before Thanksgiving and between Thanksgiving and Christmas are quiet weeks in regards to activity. 

Another dynamic in the market has been historically high supply, (listings on the market). That supply number peaked around 9,600 and is now contracting. The supply is still exceptionally high, but is now trending in the right direction as listings continue to go into contract at an increasing rate. 

Here is some historical perspective on the recovery. This 5-year graph shows signed contracts on a monthly basis broken down by price point. You can see the signed contracts fall off a cliff in March then slowly start to normalize coming into November. 

One more historical chart demonstrating history of Supply vs Demand. This historical data from 2007 to today, shows the gap between overall inventory (supply, in blue) and the number of pending transactions (demand, in red). The gap was widest during the financial crisis in 2008-2009 leading to a very strong recovery peaking in 2015-2016. We’re seeing a peak in that gap now as supply is contracting and pending sales are rising. The luxury market (over $4M), showed strong signs of recovery tallying 95 contracts signed in November vs. 85 in 2019.

What about prices? 

The issue with the data here is that closed sales price data is between 2-4 months delayed from when the contracts were negotiated. The deal needs to go through the sales process and then be filed with the city and reported. 

The main takeaway here is that the volume of deals over the past 6 months in all price points has been severely depressed and discounts have been significant. Sellers who have been on the market for a while are beginning to come to this realization and adjust prices accordingly. 

The chart below expresses the average price cuts since the market reopening in June delineated by price point. Clearly the uber luxury market has made the biggest cuts in order to generate interest. Properties priced between $2-3M have interestingly only cut an average of 3.9% off the asking price, this shows the persistent demand at this price point. 

Last chart I promise!

Here is the historical difference between last asking price and actual sale price. This has been steadily increasing since the height of the market in 2015-2016. This number is starting to subside as sellers are more informed and pricing more appropriately and there is increased demand from buyers. 

Congrats if you made it this far!

Always happy to discuss.