After a relatively quiet summer, we expect to see an increase in contract activity as the fall season approaches. We’ve already noticed an uptick in inventory to hit the market from owners waiting to list after Labor Day, and expect a very busy season.
Some other factors to consider:
- GAP BETWEEN RESALE AND NEW DEVELOPMENT NARROWS The price difference between resale and new-development condos narrowed for the fourth consecutive month, to $314/sq. ft., and the price per-foot in new developments dropped 18% year-over-year. New development condo prices averaged $2,074/sq. ft. this month, compared to $1,760/sq. ft. for non-new development condominium sales. We attribute this to the recent influx of affordable new luxury developments to hit the market over the last 12 months.
- RENTAL PRICES FALL Manhattan rents fell by 2% in August year-over-year, the fourth largest decrease in the nation. Brooklyn came in seventh, with a decrease of 1.3%. Having said this, certain neighborhoods have been performing very well. SoHo saw the largest year-over-year increase, at 7.1%, and in Brooklyn it was Greenpoint with 4.8% growth.
- NEW DEVELOPMENT DRIVES UP RENTAL INVENTORY The number of new leases signed in Manhattan reached 7,061 in August, a 12% increase over the last year. However, vacancy has gone up as well. This is due to a surplus of new development inventory and concessions, leading tenants to give pushback on renewals. It’s not uncommon for tenants to request no increase or even a decrease in rent in this market. Many landlords won’t agree to this and end up listing their apartment for rent. They later see they would be getting net effectively less, between vacancy and rent, than what their tenant was requesting.
- LUXURY LULL CONTINUES Coming off of the holiday weekend we only saw 14 contracts signed at $4 million and above. This marked the 11th straight week with less than 20 luxury contracts signed, which is the weakest stretch since 2012. The total asking dollar volume was $111 million.