It’s widely agreed upon that the sale of Bear Stearns was the pivotal transition moment in the New York City Real Estate market. Over the previous six months or so, things had been gradually shifting away from the strong seller’s market mentality that had pervaded Manhattan and New York City as a whole.
Even immediately before Bear Stearns, a buyer’s market in NYC was subtly beginning to show itself. However, the general perception still held of a market that had reached something akin to what the New York Times called a “buyer-seller detente.” With the astounding collapse of one of the Big Five, however, that mentality was instantly dashed, and talks of an actual dive in luxury market prices became commonplace.
Fortunately, that hasn’t happened yet. Inventory has shot way up, though, and it is likely that the market will soon be seeing not just the precursors to negative numbers, but actual negative numbers themselves.
Forbes, which does particularly strong New York real estate research, has put together a list of the ten sections of Manhattan that have seen the greatest increase in average on-the-market time spans.
Sales times are only a rough indicator of future price changes, at best. Sometimes it just means an unusually hot market has calmed down a bit and returned to its normal, fast-paced growth in value. Nonetheless, Forbes’ list is particularly instructive, because they have analyzed the market by dividing it into two different eras, pre, and post-Bear Stearns. So, it should do a good job at capturing some of the most recent market dynamics – dynamics that are likely to be only exacerbated by this week’s market activity.
The Lower East Side comes in at number ten, with a 35% increase in average days on the market, from 146 to 198. Gramercy Park and Chelsea are both tied for the eighth position, with a 45% increase. Similarly, the TriBeCa region showed a 56% increase. At number six, though, the numbers become more extreme. Apartments on the Upper East Side (10028) used to be on the market an average of just 100 days. Now they are typically on the market for 175 days: an increase of 75%.
The Upper West Side saw largely the same change, falling from a shorter 82 day average sale time to 146 days; an increase of 79%. Soho and Murray Hill both had similar increases, of 82% and 84% respectively. Another Upper East Side area code, 10128, saw the second largest increase, growing an average of 89%. Finally, the West Village saw the single biggest difference, with a massive 90% change, from 132 days to 250.
So, expect sellers in these areas to start seriously re-evaluating their price schemes in the downward direction, and soon. The events of the past two weeks have shaken nearly everyone in the city to some extent, and it’s doubtful that agents that have seen average sales times increase dramatically will be too resilient against price drops in the context of 700 point drops in the Dow. Especially for the areas on the top half of that list, price decreases are likely coming, if not already here.