The Q1 2017 sales market reports are in and it’s time to dive in and get a sense of the NYC real estate market. Overall, the market is in a rebuilding phase based on the pricing readjustment we’ve written about over the past few months. While median sales prices have dipped slightly, sales volume managed to inch up, as sellers finally adjusted to market realities and priced accordingly. Further, much evidence points to a release of pent-up demand in the resale market, which accumulated before the U.S. election last November as uncertainty loomed. That’s what accounts for some of the transaction pop we’re seeing, the impact of which actually overpowered the rise in inventory.
In terms of prices, as we look to a year on year comparison, last year’s numbers were excessively weighted in favor of new development closings, which skewed prices upward based on their ultra-luxury bias. The fact that prices have not dropped more significantly bodes well for what’s to come. The average sales price continues to sit above the $3M mark in condominiums and above the $1.2M mark for co-ops.
New developments are especially good at skewing data, as contracts are signed a good 1-2 years prior to close, meaning the timing attribution of those numbers is way off. As an example, new development legacy contracts cased median luxury prices to hit a record high at $6.95M this quarter. This same data shows roughly 2/3 of new development sales closing at list price. However, these are lagging sales … way lagging. The reality on the ground now is different, with marketing time and inventory both rising sharply as developers are looking to offload their goods before they become stale.
Indeed, and as we predicted last year, we believe that 2017 will be a “second-half year”. We are seeing significant pick-up across the board and are gearing up for a very strong Q3 and Q4. Of note, reports are always lagging indicators by 6-9 months. We mention this because we don’t anticipate seeing the full evidence of this market strength until the end of this year or the beginning of next year. This makes for a very dynamic market in which it’s easy to anchor to current (old) data. Make sure you talk to people on-the-ground to position yourself effectively, whether as buyer or seller.