We hope that everyone is enjoying the beginning of Spring. Although it does not feel quite like what we expect from Spring in New York City yet, we are excited for what lies around the corner. The days get longer, the sun shines brighter, everything is in bloom, and the city’s real estate market heats up as buyers and sellers both make their respective push into the market. The lead up to the Spring Market has been active and March continued this trend.
January and February both showed double-digit percent increases in contracts signed compared to the same time last year. According to our data crunchers at Urban Digs, March proved to be even more active, as we saw contract signed activity up 26.4% from February and up 14.8% from one year ago. They also reported that supply was flat from the prior month but up 7.3% from the prior year. Price per square foot and median sale price both saw modest gains in March.
The confluence of optimism in the economy, positive jobs reports, the surging stock market, speculation of rising interest rates, the firming up of inflation, and rising NYC population are all working in opposition to what many expected to be a more robust buyers’ market. However, the amount of discount that it took to get these properties to signed contract really depends heavily on price-point.
We have recently seen an uptick in contracts signed in higher price-points, which can be attributed to sellers of luxury properties shedding their aspirational price tags to levels where buyers have been receptive. New Development contract signed activity has also risen sharply. This renewed activity in the New Development market is most likely not enough to make a significant enough dent in the impending supply. This area is still a major opportunity for savvy buyers and investors.
In the market for properties below $2 Million, we are seeing many buyers that are expecting deeper discounts than both the market and sellers are willing to concede. The market for properties between $1 and $2 Million has seen a modest decline from its peak of only approximately 5%. As we have been reporting, the sub $1 Million market is still very competitive with bidding wars and packed open houses still the norm in many areas.
This competition in the sub $1 Million market and relative normalcy, as opposed to a strict buyers’ market, in the middle of the market has a lot to do with the speculation of increased mortgage rates. In the middle of the month, The Fed made good on their widely expected move to raise interest rates for the first time in 2017. This was the first of, what most analysts believe will be, a total of three hikes this year. The consumer mortgage rate has not seen much movement from this first hike yet; however, the prediction is that the 30-year fixed mortgage rate will hit 4.6% by the end of 2017.
Finally, one area that is currently seeing a dip across the board is the New York City rental market. Supply-side concessions are the norm across Manhattan, Brooklyn and Queens. According to real estate expert, Jonathan Miller, “While higher-end inventory generally remains the weakest, we’re seeing declines across all sizes… across the market.” So, if you are in the rental market, expect to see a free month being offered or landlords paying fees that are traditionally associated with tenants.
We will continue to keep you up to date on recent happenings and trends in the market. We hope that you find this information 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.