After a temporary dip in 2016, prices for expensive Manhattan and Brooklyn real estate seems to be on the rise yet again. But no matter how quickly the bubble re-inflates, it can't seem to keep up with the perpetually positive outlook of New York's home sellers.
As Bloomberg points out today, despite a rise in prices YoY, 25% of homes sold in 2Q still experienced a price cut at closing versus their original listing prices. Moreover, as much as 40-60% of the homes sold in the more trendy neighborhoods are seeing price cuts.
In most Manhattan neighborhoods, at least 25 percent of homes on the market in the second quarter had their prices cut. The share was smaller only at the borough’s northernmost tip, in Inwood and Marble Hill. In prime areas such as the West Village and Chelsea, about half of listings had their prices trimmed.
Even in high-demand Brooklyn, owners realized they’d gotten too ambitious. Forty-one percent of Williamsburg listings saw a reduction in asking price, while in Bushwick, the share was 48 percent. The waterfront area that includes Red Hook had the biggest share of cuts, at 59 percent.
The whittling shows “that even in these areas that are really hot, it’s possible for sellers to be out of sync with the market, and that there is a limit to how high prices can go,” said Grant Long, senior economist with StreetEasy, which provided the data.
But, it's not all bad news for Manhattan real estate owners these days as Douglas Elliman notes that 2Q prices and volume were both up fairly substantially, on a sequential and YoY basis.
That said, the new development market, which has been flooded by supply additions courtesy of Yellen's accommodative interest rates, remains a key weak spot for the Manhattan market with prices per foot down 15% sequentially and listing discounts soaring to 7.5% versus units that were flying off the shelf at a 1% premium to listing price last year.
As we like to say, eventually things like math and supply/demand models actually matter...