A gradual chill continued in the Manhattan market last month, with inventory rising while macroeconomic factors – rising interest rates, inflation, decline in the stock market, and recession fears – put downward pressure on demand. Anecdotally, the decline in the stock market has been the overwhelming reason for buyers exiting the market. Not only have buyers seen their net worths shrink (making some less qualified for purchases), but the prospect of selling in a bear market has deterred them from liquidating holdings and in some cases, affected expected parental gifts for the same reason. We have not perceived rising interest rates to be nearly as big of a factor as almost all of our buyers have been securing rates from 3.5-4.5% (higher than a year ago but not prohibitive) on their recent loans, and not the 5%+ rates that have made headlines.

In May, active inventory saw its first notable uptick (up 4.8% vs. April and 0.4% year-over-year), while signed contracts were down both month-over-month (-9%) and year-over-year (-22.6%). This pushed overall prices down slightly versus last month, although still up year-over-year. Looking closer at these market-wide figures, there was a big difference between coops and condos. Coops saw a 3.9% uptick in inventory yet a substantial -18.5% drop in contracts. On the other hand, both condo inventory and signed contracts were up versus last month (though contracts were down 16.5% from the condo-spree of Spring 2021).  

As we’ve come to expect, the Brooklyn market has been resilient to external factors, with all price metrics (median and average sale prices and average PPSF) again up from April and year-over-year. However, a slight uptick in inventory has curbed the ferocity of bidding wars on some less-special properties. Market-wide, average days on market increased (+7.2% vs. April) and contract activity declined (-9.9% vs. April and -20.6% vs. last May). Nonetheless, rare properties – e.g. 2+ beds with outdoor space in popular neighborhoods or townhomes – are still moving quickly and receiving multiple offers, especially those priced attractively or in especially high-demand / low inventory areas.

In contrast to Manhattan, Brooklyn coops outperformed condos last month, with larger increases in price metrics and a smaller decline in both days on market and signed contracts. This can perhaps be attributed to a continued discrepancy in inventory: condo inventory was up 10% vs. April (+2.8% year-over-year) while coop inventory was only up 3% vs. April, and was actually down -8.3% year-over-year.

(NY TIMES)

The frenzied pace of the NYC sales market is calming down, a result of more listings on the market and slowing demand. With less competition, buyers have gained some breathing room—they can take a day or two to make an offer—something not possible in recent months.

BRICK UNDERGROUND

Commercial Observer