We strive for quality above all else with each of our monthly Bamberger Reports. We also don’t shy away from telling our stories with a strong dose of personal opinion on all things real estate and Murray Hill.
This issue of the report is no different. But given the controversy surrounding the policies and ideologies championed by Donald Trump, the driving force behind the topics discussed in this month’s newsletter, as well as our own opinions regarding the man and his administration, we felt the need to stress that we have attempted to arrive at all conclusions presented below with an empirical and objective eye regardless of the biases we may hold as individuals.
As always, we welcome your thoughts, comments and concerns. Onto the report.
What Happened to New York City Real Estate in 2016?
In a nutshell, the luxury market was at a quasi-standstill by the end of the year.
This is, of course, when compared to what has happened to the real estate industry here in Manhattan since the Great Recession. In the past half-decade, the island has seen a record amount of activity in building development, construction, and transactions. And with brokerage firm Douglas Elliman reporting a previously unheard of $1.95 million average apartment value in the fourth quarter of 2015, many prognosticators expected this sort of behavior to continue at the onset of this past election year.
But according to real estate analytics site UrbanDigs, brokers across the city were already reporting a 20% drop in signed apartment contracts by the end of February when compared to rates from the same period the year prior, dipping to a level not seen since 2009.
The news did not get better as the months– and the election season– wore on. At the end of the 2015 3rd Quarter, buyers agreeing to pay over asking price reached a record 31%. At the end of the same quarter in 2016, that number stood at just 17%, according to both Miller Samuel and Douglas Elliman. By the new year, both signed contracts and closed sales were down by 15%– an 18% drop in luxury sales, as per a report by brokerage firm Orshan Realty– and the average amount of time spent by previously owned apartments on the market crept up by one work week to a total of 72 days.
At the same time, the vacancy rates of Manhattan apartments rose to 2.11%, the highest in seven years, according to Bloomberg.
It’s important to keep track of rates like these. Not only so you, the New York home owner, and experts can properly modify expectations for the market in 2017, but because building development, especially those of luxury condos, has continued to skyrocket even as the demand continues to descend.
Consider also the following facts, courtesy of an alarmist but must-read article from CNBC titled “This Real Estate Market is about to crash”: 5,377 luxury condo units in development in 2016 will soon hit the market. The average time on market for these new apartments now averages 90 days, an even longer time than the amount spent by those in older buildings. At a time when the strength of the dollar makes those apartments even pricier, many in the NYC real estate world must ask themselves what the ramifications will be for some of their biggest clients: foreign buyers.
It’s in this climate that we must consider the implications of a Trump presidency.