The 3rd and 4th quarter housing reports parallel and reconfirm a market in great need of new product. As reported by REBNY, Brooklyn and Queens saw 31% and 40% increases in residential sales respectively, which outpaced Manhattan at 19% over 4th quarter 2012. These figures have great impact on how the market will perform the first half of 2014, which is traditionally the height of the city’s selling season.
CORE’s Real Time Report highlights four very important market influencers that deserve a closer look.
1.) Overall inventory in Manhattan is down 9%.
Approximately 2,500 new development units hit the market in 2013, 90% of which went into contract or closed. 2014 is slated to see similar numbers. The lack of new product limits options for resale owners, which is exacerbated by tight lending regulations and increased short-term mortgage rates that prevent a lateral move or trade up. These aspects will continue to keep the housing stock depressed.
2.) Contracts are down over all.
There were fewer products to sell in the 4th quarter. However, on a percentage basis, more of the total available inventory in the 4th quarter sold compared to the 3rd quarter, which was 28% and 26% respectively.
3.) Median listing price is up in all but one neighborhood.
Approximately 5,500 units of available product are currently on the market. That low inventory figure and lack of new development products in the luxury and low-income sectors will push prices upward, unless demand slows. In addition, entry-level apartments have seen the largest increase in demand as buyers compete to get a foothold in the marketplace. They fear being priced out or that mortgage rates will creep higher due to federal tapering.
4.) All bedroom categories have seen significant price increases, except for studios.
One-bedroom and larger apartments have always been the best investments in metropolitan areas, especially among households with children. One plus bedroom homes have seen a significant upswing in values as inventory dwindles and demands stays steady.
A key aspect to remember is that only 22.7% of the 847,000 housing units in Manhattan are privately held, which equates to roughly 192,000 cooperatives, condominiums and townhouses. Pointedly, over the last six consecutive quarters, roughly 3% of the housing stock has been up for sale at any given time, equating to approximately 1.6 million residences.
The name of the game is to get into the market sooner rather than later. With limited inventory, steady demand and high global appeal, there are no signs of this market slowing down in the next 24-36 months.