Manhattan and New York City possess some of the priciest housing averages in the U.S., and the market is a haven for the premium development crowd.
But now, even for the ultra-luxury niche, supply seems to be outpacing demand. According to the Federal Reserve Beige Book February 2016 report, condo sales declined in New York City, while residential real estate prices increased overall.
High-end market overcrowded?
“A major New York City appraisal firms also notes that the high end of both the purchase and rental markets has been particularly sluggish, reflecting excess supply; a similar pattern prevails for high-end rental markets across the District more broadly,” the Fed report said.
Many New York City residential experts observed the overcrowding of the high-priced market, including StreetEasy in its 2015 Q4 Market Report. Since early 2015, Manhattan’s priciest condos have demonstrated consisted value deteriorations.
[Tweet “Since early 2015, #Manhattan’s priciest condos have consistently deteriorated in value.”]
Although moderate residential properties — which StreetEasy categorizes as between $525,000 and $1.3 million — in Manhattan have shown value appreciation, steep properties experienced seven consecutive months of decline. Median price shifted from $3.27 million in May to $3.26 million in December of 2015, according to StreetEasy Blog.
In a Feb. 26 release, StreetEasy released data showing that the median time on the market for Manhattan’s luxury tier increased by 33 days from last year to reach a median 131 days, primarily due to slackening condo sales.
The firm remarked on the tempering of the market.
“Sellers in this market may discover that they cannot set prices and expectations high with the anticipation of a quick sale. The market is starting to look more like 2013, a period of stable growth prior to the surge of 2014 and 2015,” data scientist Alan Lightfeldt said.
Bidding wars diminished
In January, The New York Times reported bidding wars on luxury sales diminished noticeably, causing asking prices to dwindle. Developers of luxury condos introduced auxiliary broker incentives, including American Express gift cards and deadline closing bonuses scaled based on unit size.
The Oosten in Williamsburg offers agents $10,000 bonuses for one-bedroom deals, $20,000 bonuses for two-bedroom deals and $30,000 bonuses for three-bedroom deals closed by the end of December 2016.
Some forward-thinking developers are including StreetEasy in its 2015 Q4 Market Report — targeting buyers in the $900,000 to $2 million price range. While these housing costs are hard to swallow for most outside New York City, or its California equivalents, these units are still considered attainable among upscale consumers.
Residential sales and rentals decelerated across the city
In general, all price points considered, residential sales and rentals recently decelerated across The Big Apple.
“New York City’s co-op and condo sales market has slowed somewhat since the beginning of the year, with both prices and activity down modestly from late-2015 levels. The city’s residential rental markets have also been somewhat softer,” the report said.
Year-over-year, the Federal Reserve recognized, rents in Manhattan remain stable. Yet Brooklyn and Queens are not pacing at the same levels as last year, which coincides with MNS’ January market report. Data indicate year-over-year average rent in Brooklyn is 1.92 percent less than last year at $2,666.26.
However, sample sizes were low, affecting ability to spot trends faultlessly, MNS stated.
