Looking back over the past six months of market activity, it is clear to see that we are in a stage of absorption recovery, yet further price weakness. This has been the fastest market adjustment we have ever seen in the city and it is clear that Manhattan has not been immune to the effects of the national housing market and weakened global economy. The last three months of 2008 had the lowest deal volume for decades, and perhaps historically. Even the post September 11, 2001 market activity decline was brisker than the decline we are currently facing. January 2009 had fewer than 200 new contracts signed in Manhattan, but since then, the deal activity has consistently increased across the board. June had more than four times the volume of new contracts signed than January. On average, the market is selling close to 40% lower than its highs from 18 months ago. In the past six months, we have seen new contracts being signed at consistently lower prices. The weakest part of the market continues to be the luxury market (3 bedrooms and larger) and even though we see a slight increase in contract prices, there are still very few larger units purchases being negotiated. There are small signs of a recovery, but it is unclear if this is seasonal, pent up demand from no activity, or buyers starting to recognize that this is clearly their market, and they are beginning to taking advantage of the opportunities that exist. As prices have continued to decline, there is a sense that we are nearing a bottom, although the timing of a turnaround is uncertain. Thanks CNBC for taking note.
June marked the lowest prices for contracts signed in studios, one and two bedroom apartments. Prices continually decline from original asking price to contract signed prices with similar decline rates, however the original asking price in smaller units has repeatedly dropped. However, in June we saw a boost in 4-6 bedroom home prices which marks the first increase in this category in 2 months.
Neighborhood Data – Q2
The second quarter of 2009 revealed some interesting neighborhood data. The East Village saw a major surge in larger apartments being sold as well as an increase in prices. In Soho there was a shift from the beginning of the quarter where we saw smaller units going into contract to June where we saw larger units going into contract and higher prices for the three and four bedrooms. Chelsea gained sales in larger unit sizes but saw a decrease in contract signed prices steadily over the quarter.
3 Month Comparison
Contract signed prices decreased in June in studios, one, two and three bedroom apartments but increased in four, five and six bedroom apartments. This coupled with the fact that June was the strongest month thus far in volume of contracts signed for the second quarter (and first quarter) of 2009 illustrates that buyers are purchasing and sellers are pricing their properties at a level the market will bear.
Volume of contracts signed for June is the highest it has been all year and is up dramatically from April. One bedroom apartments still rank the highest in total number of contracts signed each month which has maintained a steady incline month to month. Each neighborhood showed an increase in contracts signed in June with the exception of Battery Park City, Clinton and the Financial District.
The only significant change seen in days on the market by unit size is that the four bedroom apartments were on the market an average of almost 100 days more in June than in May. The Flatiron District saw both the longest and shortest number of days on the market this quarter with an average of 282 days in April and 123 days in June.
Q2 09 Inventory
Availability for resales in the second quarter of 2009 saw an overall decline in available units on the market. This could be because people are not willing to sell their current home at the values of today. New development availability continues to change as some new developments have sold out and closed in recent months while few have been brought to market. We see consistency in the financial district where it seems the same buildings have been available for the entirety of the second quarter. June saw a surge in contracts signed at new developments across the city for the first time this quarter (and year). With 85 contracts signed in new developments in June, this marks the highest margin above the previous high in February of 49.