New York City apartment owners should take note of the latest 3Q16 "Elliman Report" on Manhattan real estate sales because the market looks to be in free fall. In fact, the number of apartment closings plunged 18.6% YoY while apartments sat on the market an average of 8.2% longer. Inventory also spiked with re-sale inventory up 8.2% YoY and new development inventory up a massive 27.2%.
"The number of re-sales has fallen year over year in each of the last four quarters at an increasing rate. Listing inventory reflected significant differences in the rate of growth between re-sale and new development. Re-sale inventory expanded 8.2% to 5,290 while new development inventory surged 27.2% to 973 respectively from the same period a year ago."
Median sales prices did increase YoY by 7.6% but collapsed QoQ despite a massive surge in pricing on the luxury end of the market.
The re-sale market looks even more bleak, on a standalone basis, as the overall numbers above are skewed by sales of super-luxury new development units. The number of re-sale closings collapsed over 20% YoY while days on the market increased 7.5%
All segments of the market exhibited volume weakness with co-op sales down 17.1% YoY on a 14.1% increase in listing days and a modest 1.4% increase in median sales price.
Condo sales declined 20.1% YoY on a 2.4% increase in listing days and a 6.7% increase in median sales price. Meanwhile, condo inventory rose over 15%.
And, of course, the luxury market seemed to hold up the best in 3Q with volumes still weak at -18.6% but median pricing up 23.9% and listing inventory down YoY.
In conclusion, the lesson seems to be that the marginal New York City buyer has been priced out of the market (volume down 20%) while sellers have not yet accepted that the bubble has burst deciding instead to maintain listing prices while letting their apartments sit on the market longer amid growing inventory levels. Meanwhile, the luxury market is the only segment that seems to be holding up which only serves to prove that Chinese billionaires still have cash they would like to hide in the U.S.