January Market Update
We at The LevinKong Team hope that your year is off to a fantastic start. The holidays – and the whirlwind of activity that accompany them – are now past. In NYC, we are beginning to gear up for the busy spring market, which typically starts to percolate in February.We have been conducting a retrospective analysis of last years’ trends, making predictions for the year to come, and taking stock of how grateful we are for all of our incredible clients, partners, and colleagues that helped make 2019 such a successful and rewarding year. We also feel so fortunate to have been able to help so many people achieve such incredible results through real estate. As we continue to take market share, our goal is to remain focused on helping our clients find incredible investment opportunities, and maximizing the potential of their real estate assets. As we prepare to bring our exciting new listing inventory to market, we are looking at trends in the co-op, condo, and multi-family property market. What we notice is the continuation of certain trends and, in general, a dynamic market that has distinct opportunities in the different market segments and categories.
Our co-op market has continued to show greater strength than the condo market. Year over year, co-op sales activity in Manhattan is up 22%, while supply is only up 4%. The market pulse, or percent of currently listed co-op properties that are in contract, is up almost 13% year over year to .53 (53% of co-op inventory in contract). 10% of co-op properties went above their asking price in the 4th quarter. As we were preparing an East Village co-op property for market, we noticed an incredible stat: 93% of the current one bedroom co-op inventory is in contract in that neighborhood. There are clearly micro-markets that are advantageous places for sellers to be in what is generally thought of as a ‘buyer’s market.’
The resale condo market, while continuing to lag behind the co-op market, is seeing some positive momentum as well. As a whole, the market pulse is up 8% year over year and pending sales activity is up 13.5% in the same period. However, price per square foot is down slightly over the same period – down 3% as a whole, but up 1% in the two-bedroom segment. Our takeaway is that we are essentially bouncing along the bottom in the resale condo market. It is still a good time to be a buyer; however, the downward momentum has certainly slowed down to a crawl at best. The new development condo sales market is still characterized by incredible oversupply and buyer concessions, and there are particularly weak market segments, such as the Financial District condo market – where a meager 11% of actively listed properties are in contract.
In December and January, we helped our buyers take advantage of properties that had weakened due to extended days on market. For instance, we had two-bedroom buyer clients of ours achieve a sales price 20% below what the same apartment (one floor lower) had sold for less than a year earlier. That was not something typical in the market, but rather achieved by isolating a vulnerable seller. We have also been working with multi-family property buyers, who are seeing returns on investment that were not possible in our market until very recently due to the confluence of lower sales prices and higher rents.
On top of that, we are witnessing interest rates at historic lows. This is favorable for buyers and sellers alike. This week, 30-year fixed rates decreased by five basis points to 3.60%. This is down from 4.45% a year ago. According to Freddie Mac, the very low-interest-rate environment has clearly had an impact on the housing market. Both new construction and home sales have surged in response to falling rates, the rebound in the economy, and improving financial market sentiment.