You may have read some headlines, spoken with brokers or chatted with friends. It’s true: the New York City real estate market is taking a breath. This should be far from a surprise to you, our readers; for some time now we have been forecasting a market normalization, away from the frenzied bidding wars and price increases we’ve seen for some time now. What does this look like on the ground and in the day to day? A few symptoms of this normalizing market:
Developer apartment shuffling: high end new developments like 111 Murray or 432 Park, as two examples are 1) carving up full-floor apartments into smaller, more accessible properties, thereby lowering the overall sales price and accessing a more prevalent buyer, and 2) placing larger, 4-5 bedroom units lower in their buildings versus on the top floors, and swapping them with 1-2 bedroom units (recognizing that people looking for large apartments are willing to buy them on lower floors). While these moves, in their own right, may seem quite modest, we do believe they could be a harbinger of things to come as the market adjusts to a new normal.
Open house traffic: we have heard this from other brokers and see this in our own open house traffic … the crowds are thinning. While earlier in the year, apartments would be literally packed with prospective buyers, now we’re observing a more moderate volume level of interested buyers, especially in the $2-$5 million range.
Time to signed contract: at the height of the market frenzy, it wouldn’t be unusual to have a signed contract within a week of listing, with many interested parties coming out of the woodwork immediately. Nowadays, good properties move within 1-3 weeks; this is still within a month of a listing mind you.
Importantly, we must keep in mind that we are seeing no evidence of any price softening at this time based on emerging trends. As of this writing, prices are still increasing at a healthy mid-single digit clip. So what does this mean for you?
If you’re a seller, we can’t say this enough: pricing strategy is everything. This is not the time to test the market to see if that one long buyer is out there who is willing to pay above market to purchase your property. Let the market determine that via multiple offers. Your best bet continues to be to price at or just below the market, to generate the volume you need to arrive at the best outcome. If you’re a buyer, you should see the rate that your hair may be turning grey from this process slowing down a bit, buying you just a tad more decision time on pulling the trigger. You should still enter the market prepared to act, perhaps with slightly less stress involved.