{October 2018} In The Mood For A Good Deal?

IT'S TIME FOR VALUE...THE SUPPLY ISSUE

After a few months of heavy supply, prices dropped noticeably in October. The median sales price dropped to 1.05mm for Manhattan, down 11% from the average sales price of the first 9 months of 2018. The most common theme in the office is that many brokers have multiple offers out, but many deals are breaking over 20k-200k. The feeling is that there is a large number of value-seeking buyers out there, waiting for the sellers to throw in the towel. And the buyers are winning for the most part. Comparing June through October of 2017 to 2018, 14% more listings came on the market this year, but only 95% of the listings went into contract, marking roughly 20% less in transaction volume. 

Let's dig into the supply issue on the new construction side. From 2014 to 2017, NYC citywide residential permit applications fell 73%. The 3 darlings of the last peak - Long Island City fell 95%, Williamsburg fell 90% and Bushwick fell 73% (The Real Deal). 90% of the NYC neighborhoods with the most apartments under construction are in Queens and Brooklyn. LIC still has the most units (6,374) in the pipeline to be completed in 2020. Williamsburg has 3,470, Bushwick 2,537, Greenpoint 2,017 and Bed-Stuy 1,969. 12,800 new housing units opened in the first half of 2018 and another 31,000 are to be completed by 2020 (A big portion of this supply is rental). (NY Post)

I am of the belief that the increasing rates and tax law changes are accomplices not main actors of the downturn. Supply is the main issue. As always, Manhattan led the oversupply train and is the first to leave it.  

Read more here on the oversupply issue in Brooklyn.

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