We hope everyone has been enjoying the sneak peek into Spring that we have been treated to throughout much of February. While the weather has been warmer than expected, the same can be said for certain segments of the NYC real estate market. Gone are the days of speaking generically of a NYC Real Estate Market or, for example, a Manhattan Real Estate Market. The relative heat in the market varies widely across neighborhoods, boroughs, and price-points.
Typical supply and demand dynamics are creating the many ‘micro-markets’ in which we are seeing vastly differing levels of activity. Rising interest rates, an optimistic financial sector, and some key new projects like the opening of the long-thought ‘mythical’ Second Avenue Subway and the redevelopment of Hudson Yards are also all having a profound impact on our market.
Some think that the real estate market, independent of price-point and location, has weakened throughout New York City. I would suggest that those who hold this opinion speak with a purchaser seeking a property under $600,000 in any prime Brooklyn neighborhood, where bidding wars and above-ask transactions are still the norm. February witnessed an uptick in activity across the board but the trend, as we have been pointing to for quite some time, is for the highest levels of demand to be found in the lowest price-points. According to data compiled by real estate search platform Streeteasy.com, the most searched properties in all five boroughs fall in the $400,000 to $600,000 range, followed closely by properties priced between $600,000 and $800,000, and in third is the price range between $800,000 and $1,000,000.
In prime Manhattan, Brooklyn and Queens neighborhoods, the sub-$1,000,000 market has, with few exceptions, seen a decline and transactions are competitively fought for by many would-be buyers. Demand is outstripping supply in this segment, but the question naturally arises, where is all the demand coming from? A large chunk of this buyer pool is comprised of first time homebuyers. Rising interest rates are spurring many of these buyers to jump into the market, before their purchasing power is further weakened. In the month of February alone, The LevinKong Team put six first time home buyers into contract.
The average Manhattan apartment recently surpassed the $2,000,000 threshold. So, how is an apartment in that price point performing? This is where perception and reality diverge. While there has been some softening in the $1,000,000 to 3,000,000 price-point, it has not been a dramatic one. What we have seen is an approximately 5% drop that has, at present, mostly stabilized. Appropriately, priced properties are selling.
As we go higher in price, that is where we have seen more dramatic loss in home value. One particular luxury property, that we have been watching for some time, has lowered its asking price from $15,000,000 to $10,000,000 and has spent almost a full year on the market. We do not anticipate a rebound in the high-end anytime soon but we do see some stabilizing influences. Namely, a cut back in new construction financing will limit added inventory that would add to the current over-supply. Also, the financial sector is preforming incredibly well, adding to many New Yorkers’ net worth. And, as many in that industry reap these rewards, it will inevitably lead to the purchasing of multi-million dollar luxury condos.
Finally, The LevinKong Team works with many investor clients and one of the areas that we, as a team, are quite bullish on, is the area positively impacted by the arrival of the Second Avenue Subway Line. Those who have endured the years of nuisance, noise and congestion from the project are finally seeing the light at the end of the tunnel. We are already witnessing positive movement on prices in the Yorkville neighborhood and new construction condo projects in the neighborhood are seeing sales paces that put most of Manhattan’s new development projects to shame. Negotiability in these projects is comparatively nonexistent as well. Look for this area to further boom as the new subway attracts a higher level of amenities to the area East of Third Avenue.
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.