What do you need to know about the 4th quarter 2018 report (link is here)?
Here is the official BHS Brokerspeak:
“Manhattan’s median apartment price fell to $1,050,000 in the fourth quarter, a 5% decline from a year ago. While the average price was up over the past year, this was due to a pickup in new development closings that included 520 Park Avenue and 220 Central Park South. Many of the contracts for these apartments were signed more than a year ago, making them not reflective of current conditions.
The number of sales continued to decline, with 7% fewer closings than the fourth quarter of 2017. High levels of supply, stock market volatility, and rising interest rates have kept many buyers on the sidelines, causing 2018 to be the worst year for apartment sales since 2009. This has frustrated sellers, as both the national and local economies remain strong. We need to remember that the Manhattan housing market hasn’t had any real correction in a decade, making apartment prices either unaffordable or undesirable to prospective buyers.
The increasing gap between the selling and last asking price for apartments does offer hope that sellers are adjusting to today’s market. Sellers received 96.7% of their last asking price in the fourth quarter, the most negotiability in over five years. More price cuts will be needed to absorb today’s supply of apartments, which at the current pace of sales will take over seven months to sell.”
It’s a fairly dark reading, if you only take away this:
- Prices are down
- Inventory is up
- Worst year for apartment sales since 2009
- Frustrated buyers
- Overpriced property remains
- Big gap in expectations; most negotiability since 2012
- Perhaps further to fall?
Shocker- I’m pretty optimistic.
- It feels that yes, sellers may need to adjust prices.
If sellers are going to sell and trade up, it’s an amazing time to do so.
They can get bigger place at a bigger discount than what they’ll have to offer on their current apartment.
If they are losing money after a long time of ownership, at least they may have been paying down their mortgage and increasing their equity.
- Mortgage rates have come down a little.
So purchasing power also went up a little for buyers.
- Stock market has been strong all the way until just about now.
Time to take money off the stock market table and buy at a better price.
- Buyers can come in with lower offers, and real sellers are motivated to sell.
- Sellers are still coming to terms, but it seems that they are closing that gap more than buyers may realize.
- Buyers ask me “what if there is further to fall?” You just never know it until the market is on the rebound.
If you’re going to own for a while, you’ve definitely missed the top.
You may not time the bottom perfectly, but you’ll pretty darn close.
2019 is going to be a great year for buyers, and for many sellers, it is not nearly as dark as the simplified quarterly report.
But nuance doesn’t sell newspapers.
More next month -Scott