The long-awaited second-quarter numbers are finally in, and the data tells an engrossing tale about the current state of New York City real estate. In particular, Prudential Douglas Elliman’s new report is a veritable treasure trove of information on the market, full of the most critical data that the market will see for the next three months.
Like the previous quarter, the number of sales fell significantly, even while the average price of New York apartments rose substantially.
Inventory was also up, as was the average number of days that units stayed on the market.
The rise in prices set a new record, though, breaking the $1,000,000 mark for the first time in history. Prudential Douglas Elliman reports the average price of a New York home to be $1,025,000. Sales prices in Manhattan, meanwhile, cleared the $1,600,000 mark.
The decline in sales activity, though, was a substantial 21.8%. More importantly, inventory rose by 31.2% in comparison to the same quarter from the previous year. Reflecting the incredible recent history of the New York apartment market, though, inventory levels remain 10.1% above the same quarter of 2006.
In a sign that the market is transitioning further into a buyer’s market, the average unit was on the market for 135 days. That is an increase of more than two weeks from the previous quarter and the first time in some time that quarterly average market time exceeded the rolling five year average of 126 days.
Because landlords have been waiting longer to sell their apartments, they have begun offering more substantial listing discounts and incentives to buy. Average discounts rose to 3.6% from the previous year’s second quarter figure of 2.2%.
The effects of the credit crunch and the slowing economy have had a greater impact on the New York market than any city-specific issues.
Foreign buyers, however, continue to have a sharp edge over domestic competitors. Those with significant holdings of Euros and Pounds have seen a steadily high rate of exchange for the past two quarters, and, for the most part, have not been as affected by the global credit crunch.
The luxury market, in particular, has become a prime investment for many with non-dollar cash holdings. Though the luxury market during the second quarter was up 37.5% from the 2Q of 2007, the demand has “eased off” of the record prices of the previous quarter, as median prices fell by 0.8%.
The condo and co-op markets behaved in relatively similar manners during the quarter, though inventory was somewhat higher in the condo market.
The loft market, however, performed the strongest during the quarter. Sales activity increased, and that kept the growth in inventory levels to extremely low. Average prices rose by about 3% and reached a record level of $1,700,000.
In all, it was an interesting quarter for the market. The strength of the fundamentals of the New York apartment market was readily apparent, as the market held up to the strain of the financial industry announcing over 70,000 layoffs.
The market seems to be shifting firmly in the direction of a buyer’s market, but its resilience suggests that the market may not last especially long.