As 2017 came to a close, the overriding theme for Manhattan real estate was that performance was specific to price point. “The Luxury Sector”, properties that sold for more than $4M, was softer than lower price points. In the overall market, median sale prices climbed 4.32% to $1,095,319 from $1,050,000 on a year-over-year basis. In addition, days on market held steady at 64 compared to last year’s 63, and the median listing discount declined to 5.88% from 6.07% last year, which suggests market stability. However, due to prices being pushed up in one segment of the market and pulled down in another, the quarter-to-quarter numbers show a decline for both average price and price per square foot. We do expect median prices to remain on trend as we begin 2018.
Read our full Q4 market report here.
Factors to consider in 2018:
- TAX OVERHAUL GOES INTO EFFECT
– State and local taxes: New cap of $10,000 on SALT (State and Local Taxes) deductions from federal taxes.
– Mortgage interest deduction: Homeowners can now only deduct their mortgage interest up to $750,000, reduced from $1,000,000.
– Home equity loans: No longer able to deduct interest on a HELOC (Home Equity Line Of Credit).
– Estate tax: The estate tax has doubled to $11.2M.
- RENTAL MARKET Rental prices in Manhattan remained flat on a month-to-month basis, dropping by only 0.1 percent in December to $3,915. The segment with the biggest drop was non-doorman studios in Tribeca (down 12.1% to $3,748) and 2 bedroom doorman units in Harlem (down 9.1% to $4,300). Despite the December drop, Harlem posted an 8.71% increase in rental rates on the year, driven by heightened new development activity. Keep in mind, most landlords are offering concessions to artificially keep rents higher.
- LUXURY MARKET REMAINS COLD Only 12 deals asking over $4 million went into contract last week, compared to 24 deals during the same week in 2017. The week before only saw 11 contracts signed. These numbers suggest a softening in the luxury market, a trend we expect to continue into the new year. We also expect concessions to rise and better negotiation leverage amongst buyers in the luxury new development sector.
- CONDO VS. CO-OP It remains a co-op seller’s market, as median sale prices increased year-over-year from $763,000 to $775,000 and days on market remained relatively unchanged at 58 days, up from 54 days last year. We anticipate properly priced co-op units to sell quickly. In the condo market median sales prices grew slightly to $1,630,975, a 0.42% increase, while the median price per square foot decreased 1.04% to $1,602/per foot. The beginning of 2018 should see a continuation of condo market stability.