Finally, the numbers from the first quarter have come out. The numbers are generally the most reliable set of indicators concerning the state of the New York City real estate market. This time around, however, they take on special significance. The first and second quarters of 2009 will likely be the lowest points in the recession. As such, they give us the best window yet into what the recession means for the New York apartment market.
Sadly, the numbers are starkly negative for New York’s real estate market, even while they have become generally positive for the nation as a whole. Nation-wide, sales rose by roughly 5%. In the city, meanwhile, total real estate closings were a full 51% less than the 2008 1Q numbers, and 27% from the prior quarter.
This should not be taken as a sign of particular weakness in the NYC real estate market. Rather, the higher level of demand means a delayed response to the business cycle.
Fortunately for homeowners, the sharp decrease in sales activity has yet to hit the average price of apartments in
Manhattan significantly: Average prices on the island fell just 2%. That being said, however, average resale values fell more than 20%.
Sales of new condo units made up 60% of the sales volume, reflecting the cyclical lag that occurs on units generally sold more than a year in advance. Indeed, the average price of new unit sales continued to grow, even in the face of the recession, which is currently clocking in at over -6%.
Accordingly, co-op sales dropped to less than a third of overall city sales, as many co-op owners have decided to sit in this buyer’s market out.
Condo inventory shot up 35% in the last quarter, reflecting the reality that prices will continue to feel downward pressure throughout the next two quarters.
For the average unit, the number of days on the market increased dramatically – up 29 days to a full 178 days.
Prices for luxury units continue to skyrocket, continuing to demonstrate that market’s near-invincibility. The average price of apartments and the average price per square foot both posted modest gains.
Overall, the first quarter numbers are not good news for the economy as a whole. The New York City real estate market is showing all the signs of a typical recessionary market, with inventory increasing, sales decreasing, and no signs of an uptick on the immediate horizon. The numbers are, however, great news for potential buyers, who will soon be greeted with the most favorable buyer’s market of the past two decades.