Apartment hunters in New York should be prepared for tight inventory and less negotiating room heading into the spring selling season. The co-op and condo market in Manhattan sustained its vigor in the fourth quarter, according to this report from Douglas Ellman.
Delving into the numbers will illustrate the point. The average selling price for co-ops and condos in the borough reached almost $1.54 million, a 7.2% increase from the prior quarter, and 5.3% above a year ago. The average price per square foot was $1,178, a 3.6% rise from the third quarter, and an 8.7% jump from the fourth quarter in 2012.
There were 3,297 sales during the period. This was up 26.9% from last year, but down 14.1% from the previous quarter. However, apartment hunters shouldn’t misinterpret the data. The fourth quarter is typically the weakest of the year as the holiday season sets in. Inventory also became tighter, and the pickings became slimmer. The listing inventory was 4,164 units, down 8.8% quarter-over-quarter, and 12.3% less than a year ago.
Interesting, home buyers appeared to have similar negotiating room from last year. The listing discount, which measures the percentage differential between the list price and the sales price, was 3.6%, comparable to the 3.7% in the year ago period. For the third quarter, it was 2%.
The absorption rate measures how quickly homes are sold in the market. This is calculated by taking the number of available homes and dividing it by the average number of sales per month. The figure shows how many months it will take to exhaust the supply of homes on the market, assuming the historical rate continues. For the fourth quarter, the absorption rate for co-ops and condos was 3.8 months, essentially flat with the 3.6 month figure in the third quarter, but down from 5.5 months in the year ago period.
The report adds interesting data to support the empirical evidence, as well as other statistics showing the strength of Manhattan’s real estate market. Heading into the spring, the market may remain heated. Home buyers may be enticed by attractive mortgage rates, despite the recent rise. In addition, the economy appears to be improving steadily, based on recent data. Nonetheless, house hunters can take heart that price increases may be more moderate as more inventory may added as sellers are enticed by higher prices, and the spring season gets underway.