As we approach the end of Summer, New Yorkers are looking to soak up the remaining perks of this sun-drenched season. For some, that means packing a picnic to enjoy in Central Park; for others, it’s heading out east to savor those final magical moments outside the city. We hope everyone has been enjoying these long days and a bit of well-deserved relaxation. The LevinKong Team extends its sincere wishes for a very happy, fun, and safe Labor Day weekend.
This summer, new rent laws, mansion tax changes, further declining mortgage interest rates and macro-economic trends each had their respective impacts on the NYC real estate market. That being said, we did see a high level of activity this season; buyers were out and deals were being made. We witnessed an uptick in luxury transactions early in the summer, as savvy buyers looked to beat new mansion tax implications. Buyers in entry-level price points jumped in to take advantage of lower interest rates, while investors benefited from falling condo prices and rising rents.
U.S. long-term mortgage rates hit near historically low levels, with the average on the benchmark 30-year loan falling to its lowest level since November 2016. Mortgage buyer, Freddie Mac, said last Thursday that the average rate on the 30-year loan slipped to 3.55% from 3.60%. The rate stood at 4.51% a year ago. The average mortgage rate for 15-year, fixed-rate home loans eased to 3.03% from 3.07% last week. The low borrowing rates have been a boon for homebuyers, even as financial markets show concern over the global economy. This has been especially true in lower price-points and in our co-op market.
The co-op market has continued to far outperform our condo market. As we continue to keep a sharp eye on market pulse –that is, the percent of active inventory in contract – we see nearly double the amount of pending contracts in the co-op market verses that of the condo market. A meager 32% of condo inventory is in contract, while a robust 63% of coop inventory is pending. Investors are starting to take advantage of these weaker condo conditions, coupled with an 8% year over year increase in net adjusted rents, to create an advantageous position.
In general, what we have seen of late is an increase in sales, an increase in inventory, a slight increase in average sales price, an increase in rents, and continued downward price trajectory in the new development market. The second quarter of 2019 saw an increase of 12.5% in sales activity over the prior year, according to Miller Samuel’s recent report. Inventory across the city went up 8.2% over the same period, and average sales price increased 4.5% to $2,019,000.
As we have been discussing for some time, the most vulnerable segment of the market is new development, which experienced an 8.5% decrease in median sales price. This is a complicated and dynamic market. Each asset class, neighborhood, and price-point is experiencing different results. There are many areas to take advantage of and there are areas to avoid; in this market, having the right perspective can yield exceptional results!
As always, please reach out with any questions on how you can take advantage of these current trends, or how to protect your real estate assets. We can also offer a wealth of knowledge regarding specific segments 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. Please let us know how we can assist!