Or, at least a little miffed.
I’m trying to understand what is going on in the market.
It’s a combination of getting data points from every real estate person I speak to, combined with speaking to my buyers, seeing traffic at my sales listings, speaking to developers, and reviewing market reports.
Here are just a few of my questions:
the current administration really interfering with NYC real estate?
- Is the news such a major distraction that buyers can’t focus on making a purchase?
Second Quarter report sends a great deal of mixed messages that we need to decipher.
Why do the numbers look so strong when the on-the-ground vibe today is so bad?
I had a meeting with our Chief Economist, Greg Heym, where I asked these questions to him.
He’s not convinced that the Trump Administration is just an excuse, and neither am I.
But maybe, as you’ll see, we’re looking at Death by 1000 tweets.
Or death by 1000 cuts.
What do I mean?
Let’s cover a few data points to consider before we look at the quarterly report:
Contracts signed, $5mm and up
Year-Over-Year, things changed significantly post-election.
In December 2016, signed contracts (68) were up YOY (year over year) by 6%.
In January 2017, signed contracts (65) were up YOY by
They (65 total) were up 50% YOY.
Since then, the increases have been very modest or DOWN (March 5% (98) YOY; April -1% (66) YOY; May 6% (90) YOY; June -8% (79) YOY).
Our economist is looking at seasonality to all of this, and it would be atypical for such a jump in December/January.
Which leads me to think that there was definitely a post-election bump.
Things have slowed down again.
So, there was a moment of clarity, where some deals happened at the high end… Are tweets distracting us?
Is it something else?
(AS I AM ABOUT TO POST THIS, OUR NEW JULY ABSORPTION
HAS COME OUT, showing some green shoots in a few places.
Take a look here.
Inventory on the East Side, for instance, has dropped a bit)
We see the same numbers with the overall contracts signed in the same period:
- December 2016 (825 contracts signed market-wide): 4% YOY
- January 2017 (725 contracts signed market-wide): 23% YOY
- February 2017 (903
contracts signed market-wide): 10% YOY
- since then: -4%; -2%; 1% 0%.
This seems the most accurate information to look at rather than closings.
I often wonder what the real value of the quarterly reports, which really are backward-facing.
Hence, this post.
My BIG takeaway is this:
There was a pickup in contracts signed at the very beginning of the year, and that is reflected in the 2nd quarter numbers.
Since then, things have quieted down, and I suspect the third quarter numbers may be a very different story.
But according to the data, the 2nd Quarter Numbers showed promise:
- The number of sales went up 23% year over year (the NUMBER OF SALES, not the price or sales volume)
- The overall average and median prices went up year over year
- Resale apartments saw a 10% average increase in prices year over year
- Cooperative prices were all higher, in every category, year over year
- Condominium prices were higher except for three-bedroom units and larger, which were down 7%.
- Resale prices averaged nearly $1.7mm, which the median prices rose 5% to just under $1mm
- Time on market for resale condos rose to nearly 100 days, a 15% increase year over year (the most troublesome data point)
- Downtown condos comprised 36.5% of all closed new development sales last quarter
The number of sales went up
That seems good, yet despite some marginal increase of sales at the high end, I am seeing much more of the transactions happening at the low end.
The average and median prices went up
This is due to New Development closings, which skew the numbers.
If you poll 100 Upper East Side and Upper West Side agents, you wouldn’t see such ebullience now.
Resale apartments saw a 10% average increase in prices year over year
But these sales seem to be concentrated in a small number.
Just a few sales can really change the averages.
Appreciation was 3% year over year for cooperatives, and 11% for condominiums year over year.
If we see a drop off in activity at the high end, these averages will drop as well.
The median sale price of coops, across the city, was up 5%, and the average resale price jumped 13%.
This normally means that the average is higher,
too, which shows that there is some movement where sellers are pricing things better.
It would seem that there WAS more activity, and an extended period of low interest rates has helped.
I just have some concerns that what gets left out of the data here are the units that didn’t sell, and were taken off the market.
To me, as long as these units have not gone to contract and sold, that information remains out of the scope of these quarterly reports.
This is a little troublesome.
In the end,
this positive outlook from the 2nd quarter report doesn’t exactly jibe with what I’m seeing today.
If contracts signed (AKA Absorption) is really down now, we will need to wait another 2 months to see just how bad it is.
Perhaps the summer will end up proving me wrong!
More next month- Scott