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While the general market throughout NYC is still very strong, there have been some signs of price sensitivity and other issues in the luxury New York City real estate market. If you’re thinking about making a purchase in this market during 2015, there are several trends you should be aware of to help you make the best choice.
Price Sensitivity and Slowing Demand for Massive Apartments
In spring of last year, there were two record $70 million co-op sales. Although those types of sales may make it seem like the sky is the limit for how far prices can climb, there have been signs that buyers are only willing to go so high before deciding to take a step back until the market cools a little.
To put this trend in context, many have referred to it as a sign that the market “is reverting from an insane market to a strong, steady market.” The signs of price sensitivity also coincide with a slowing demand for large apartments. Specifically, while 2014 saw an increase in luxury sales, it also saw an ongoing drop in sales of four-bedroom apartments.
New Developments Becoming Exponentially More Expensive than Resales
During the second quarter of 2014, the median price for new luxury developments was $17 million. That represents an incredible 169.5% increase from the same quarter of the previous year. In comparison, the median for resales (91% of which were in the luxury market) during the same time period was $4.49 million. That marked an increase of just 17% from the previous year.
Luxury Apartments Sitting on the Market for Longer
The term absorption rate refers to how long it would take for all current inventory to sell out. In the luxury New York City real estate, the absorption rate saw an increase in 2014 after seeing decreases for most of the previous two years.
The most common explanation for the increased absorption rate in this segment of the market is that buyers don’t feel pressured to act right away. Instead, buyers are taking their time and evaluating different options within the market.
Luxury Contracts Signings on a Downward Trend
Based on the information covered in the previous section, it shouldn’t come as a surprise that actually signings of luxury contracts also saw a slowdown in 2014. During the first half of 2014, total signings on apartments costing at least $4 million were down 8% from the previous year.
What Do These Trends Mean for Luxury New York City Real Estate Buyers?
Do these signs of slowing activity in the market mean that buyers should avoid making a purchase? In our expert opinion, the answer to that question is no. Based on these various signs of mild cooling, savvy buyers may have more negotiating power during the upcoming year than they would have had during the previous few years.
Since navigating the luxury New York City real estate market can still be a major challenge, learn more about how working with an exclusive New York City buyer agent can help you find the ideal property.