We hope that everyone had a fantastic summer and we welcome back the New York City real estate market from its lazy days of August. We were very pleased to see robust sales activity in July, particularly in the segment of the market under $2,500,000, but August proved to be its customary slow-moving self. As we progress further into the post-Labor Day selling season, what trends are we seeing?
Over the last several months, we have gone into great depth about the softening in the high-end luxury market. Not only is this projected to continue but we expect it to be further exacerbated as more of the high-end luxury new development comes to market. Developers are offering concessions and a willingness to negotiate that hasn’t been seen since the end of the last decade. Coupled with the continued strength of the U.S. Dollar, the inability for some of our best overseas clients to get their money out of their home nations, and the crackdown on anonymous LLC buyers, we will see a normalizing of prices in the luxury sector to fall in line with a truer value rather than the over-hyped levels of the past several years. Sensing this change in the sales climate and with the end of the 421A tax abatement program, developers have put in for the lowest level of new permits since the financial crisis. Permits have dropped by more than 75% since last year. This should bode well for intrepid new development buyers who achieve major price reductions and look to sell in several years’ time.
In the ‘affordable’ portions of the market, we are still seeing strength. There is normal inventory and high levels of demand, particularly in the market for properties under $2,500,000. Low interest rates and typical housing needs are the driving forces behind the relative safeguard protecting home prices here. Most buyers in this segment of the market depend on financing and the historically low interest rates are keeping buyers engaged and active. The frenetic pace and constant bidding wars may be less evident but pricing is holding strong and deals are being done at a decent rate. In certain neighborhoods and price-points, we are still seeing prices rise.
The dichotomy between the high-end and normal sales market is being mirrored in the rental market as well. We are seeing more inventory and owner concessions in the high-end rental market while the normal rental market is competitive and for the most part holding strong. As many of the new development units close over the next year, we should see the high-end rental market soften even more.
While global economic trends, recent events such as the Brexit vote, and the upcoming unpopular presidential election are creating elevated levels of uncertainty, outside of the luxury sector, the New York City real estate market is performing better than many forecasters had predicted. As evidenced by the vigor of lower Manhattan at the fifteenth anniversary of the September 11th attacks, NYC is unwavering in its strength and continues to trend in one direction, up.
We will continue to keep you up to date on recent happenings and trends in the market. We hope that you find this informative and useful and, please, as always, reach out with any questions on how you can take advantage of these current trends or how to protect your real estate assets. Also, feel free to reach out with any questions regarding a specific trend or segment of the market. The LevinKong Team is available to serve all your New York City real estate needs and those of your friends, family and colleagues
Have a look at the attached articles, check out these incredibly interesting graphs and please, as always, reach out with any questions on how you can take advantage of these current trends or how to protect your real estate assets. Also, feel free to reach out with any questions regarding a specific trend or segment of the market. The LevinKong Team is available to serve all your New York City real estate needs and those of your friends, family and colleagues.
Less than 2,000 new resi units were approved in Q1
Building permits fall dramatically