The fall is well upon us and we’re finally able to smell crispness in the air, while hearing the pitter patter of buyers’ feet beginning the post-Labor-Day open house journey yet again. It’s time to check in on the market and get a sense of what’s happening. Noteworthy: September numbers are not in just yet so we’ll be taking a look at August numbers for the most part, coupled with anecdotal observations we’ve seen in September so far.
Inventory: The inventory story has been front and center for some time now, and the present day is not that different. As of the writing of this newsletter, inventory is up roughly 17% from last month, and about 15% from this time last year. That’s the good news. Since 2008 until now, considering all the highs and lows of inventory, we’re right in the middle: not too much, not too little. The way in which this is translating on the ground is that there is a healthy flow of transactions unfolding in NYC, with both buyers and sellers calibrating to the new norm.
Sales volume: Activity is definitely picking up, after a gentle downturn that began right before the summer months. That said, properties are taking longer to sell, with the median Days on Market inching up to 72 days, up about 10% on a monthly and annual basis. Because the sales cycle is stretching out a bit, don’t be surprised if quarter-end sales end up trending lower as the market catches up to a more relaxed market environment.
Coops vs. Condos: One of the more interesting stories emerging right now is the comeback of the co-op. For several years now, condo transactions have overwhelmed co-op transactions due to their inherent flexibility and relative newness. However, as prices have continued their ascent for over 7 years now, condos have become farther out of reach for many. It’s no surprise, therefore, that so many co-ops have become a value play, especially for first time home buyers. In fact, a whopping 65% of co-op transactions occurred under the $1mm mark, versus a mere 25% for condos. Further, although we often think of co-ops requiring far more cash to buy, just over 38% of co-op transactions were all cash in August vs. 60% for condos. The world is-a-changin’.
Pricing dynamics: Of note, in this normalizing market, is the importance of pricing a property correctly. Whereas only a year ago, more than half of buyers paid over the asking price for their new possession, nowadays, that number has been cut in half. 30% of co-op buyers paid over asking in August, versus 13% of condo buyers. Why the difference? It’s because of the concentration of buyers in the sub-million market of co-ops, spurring competition and supporting prices for that small segment of quality jewels. If you consider the relative efficiency of the condo market as compared to the co-op market, it shouldn’t be too surprising that 37% of condo buyers paid the asking price for their units, versus only 13% for co-ops. This leaves just over ½ of transactions coming in at below asking prices.
It has never been more important to be diligent about positioning your own property well by having an intelligent and well-researched pricing strategy.