Who Dares, Wins

Uncertainty is the enemy of all markets, and we are in a perfect storm: an unclear resolution of the trade war, an upcoming presidential election, and unknown outcome as to a recession (existence/strength). The absence of international buyers due to the strong dollar and overdevelopment in the luxury condominium sector are draining the sense of urgency that exists in markets more balanced in terms of demand and supply. The recently increased mansion taxes and decreased deductions are also dampening the market. It is thus necessary to create urgency using other means (e.g., compelling pricing).

On a positive note for buyers, cheap money and a strong stock market present an enormous opportunity to extract return. Competition for buyer attention is prompting developers to offer incentives to move product. There is also no better time to trade up, the discount on the sale being outweighed by that on the purchase. 

 Bright spots:

•  Momentum in the market exists: contracts signed per month increased 3.1% YOY (we would have expected a decrease given the 2Q19 tax change anomaly) and months of supply decreased 2.5% (product is being absorbed faster than it’s being listed)
• 90% of closings were under $3M, and despite most price points being down YOY, closings of apartments under $500,000 increased 4.8%
• The number of all-cash deals were down approximately 7%, indicating buyers are leveraging the low rate environment and helping fuel activity

 Advantage goes to consumers in markets when demand is down and supply is up, given they hold the upper hand in negotiations.  Please see the 3Q Compass Market Report for more details.

Sources: Manhattan residential brokerage 3Q19 reports

Open House Alert: Comes See 11 East 29th Street, 24C This Sunday 12-1pm