The New York condo market may be steamrolling ahead into uncertain waters. A new report by Halstead Property Development Marketing shows that available new construction inventory in New York City was up 35% during Q2 2017. During the same quarter, the market saw contracts on new construction units fall 23% and Douglas Elliman's quarterly report shows that Manhattan's resale inventory fell for the first time in 3 years. The drop in resale inventory has been powered by expired listings due to overpricing and rising inventory. There is just too much inventory compared to shoppers in the current market. 5,936 new construction units were listed in the market during Q2 2017, while a mere 350 went under contract during the same period. During 2017, 2,600 units are expected to hit the market. Brooklyn itself saw a 28% drop in condo inventory during the same period.
During Q2 2017, new construction median pricing came to $3.3 million, up 23% year over year. The media price of a Manhattan apartment hit a record $1.2 million in Q2 2017, up 7% year over year. Comparatively, the median price for a condominium was $1.9 million while the median price of a co-op came to just $793,750.
"What is clear that the Manhattan real estate market remains surprisingly robust, especially on the re-sale side. Prices have moved higher, including two new records set and there has been a sharp rise in sales, as inventory has slipped," said Steven James, CEO of Douglas Elliman New York City.
The upper, luxury reaches of the market have seen the biggest drop as many overpriced their units hoping to catch onto the furious cycle that saw prices rise to unprecedented level. The luxury market saw an 11% drop in inventory as sellers begin to accept the new market conditions; despite that, at the same time the median price of luxury apartment sales rose to $6.8 million, up 4% year over year.
"High sales, record prices, re-sale inventory beginning to slip and still plenty of bidding wars (although at half the levels seems in 2015), is what we have seen in the second quarter of 2017. The key item from my perspective is greater negotiability at the high end of the marketplace. Listing discounts began rising in the last quarter which means that luxury sellers are becoming more realistic with pricing. Marketing time keeps expanding because buyers won't budge. Marketing time keeps expanding because buyers won't budge and that is making for more sales as sellers recognize that," said Jonathan Miller of Miller Samuel, Inc.