The June Report
It's official. Eight thousand available residential properties in Manhattan (according to Streeteasy.com). The city’s inventory has not broken this number since 2010. Back then it was the end of the great market recession.
We have a very different market today. The job and stock markets seem to be flourishing. Banks are lending. Interest rates have risen slightly, but still low compared to historic standards. This is not the dark market of 8-10 years ago.
Yet today prices are dropping and sales are puttering. Let's break down our current climate.
Starting is a drop in demand for Manhattan properties. This is dramatically effecting us. There are many reasons why, but we feel one of the biggest is a lack of foreign buyers. Combine U.S. regulations on foreign buyers with regulations from their home countries on
money here, and it hits both sides hard. New York City is one of the chief international investment markets, and we aren’t seeing the normal healthy interest we are used to, with a decrease in Manhattan demand of at least 15-20%.
The rental market is also to blame. With over 10,000 available rentals in Manhattan on the market, it casts a giant shadow. Rents have dropped considerably over the past year. When rents are low, it holds back investors from buying rental income properties in the city as their cap rate falls. A strong stock market makes it hard for investors to put money toward a weak cap rate on investment properties. Likewise, when would-be buyers can take advantage of low rents, landlord concessions and extended leases that they can lock for years, they are taking advantage of the opportunity. So the buyer pool has shrunk and there is a looming inventory surplus.
In addition, throw in the anticipation of rising interest rates, losing deductions on real estate taxes and mortgages, and it's the perfect cocktail for this shaken, not stirred reality we're in. With a surplus in inventory, prices that have travelled down anywhere from 15-35% across various sectors and low interest rates means these are golden days for buyers!
Prices are low. Banks are lending. The overall fiscal market and future look damn good.
Sellers are not only lowering prices but bending over backwards to make deals happen. We've seen sellers painting, leaving furniture and even remodeling to help make the deal go through. This is definitely not the usual scenario in any other market. We have also seen buyers who feel there is room in the market and prices will continue to fall. They are hesitating to move forward. They may be right. But what often happens when things bottom out, the best properties are picked up, sellers with more attractive properties hold off on releasing to market, and the market is overripe with lemons. Whichever way it goes one thing is certain, anyone who buys during the summer of 2018 will be very happy for years to come.