It conjures up so many images – from that Sinatra song and the Statue of Liberty, to the bright lights of Broadway, the yellow cabs, Central Park, the Rockefeller Centre and Times Square – but what is the current state of the property market in one of the world’s global cities?
With help from the Berkshire Hathaway HomeServices Kay & Co ‘Manhattan Market Report 3rd Quarter 2019’, Property Investor Today does some digging.
Deciphering the different housing terms
First things first, to highlight the differences between the housing terms used in the US and UK and clear up any possible confusion, here is a quick rundown:
Condo/condominium – a phrase you’ll often hear used in America, but which is almost completely alien to us in Britain, a condo is effectively the equivalent of a British owner-occupied flat.
Co-op – highly uncommon in the UK, accounting for only about 0.1% of homes, Co-ops – also known as housing cooperatives or housing co-ops – are far more widespread in the US and particularly common in major cities such as New York, Chicago and Washington DC. It’s a housing arrangement where people don’t actually own their property, but instead own shares of a corporation, which in turn owns all of the property in the cooperative. The number of shares you own corresponds with the size of your apartment.
Inventory – the supply of housing on the market up for sale.
Real estate market – the equivalent of the property market or sector over here. While the real estate market is not unheard of as a term in Britain, property market tends to be used far more frequently – in the US the opposite is very much the case.
Supply falls across all sectors
Ellie Johnson, president of Berkshire Hathaway HomeServices New York Properties, says that after two quarters of increasing inventory in the Manhattan Condo, Co-op and Townhouse markets, the third quarter saw a reversal, with inventory levels declining across all sectors.
However, monthly statistics revealed that inventory levels began to trend upwards in September as summer came to an end and the autumn marketing period started.
In the past quarter, lower supply levels resulted in fewer contracts signed in the Condo and Co-op segments when compared to previous years, with all three major market segments seeing fewer overall signed contracts in the ﬁrst three quarters of 2019.
As well as the fall in contracts signed, lower average and median sale prices highlight a decline for all three market segments in comparison to the previous quarter and year.
According to the findings of the report, the fourth highest sales price for Condo units in the third quarter of 2019 occurred at 220 Central Park South, a 66-storey luxury new construction project by architect A.M. Stern.
This project occupied nine of the top twelve highest condo sale positions for the quarter, culminating with a penthouse unit sold at a huge $65,750,000, while the highlight of the Co-op market for the third quarter was the sale of Berkshire Hathaway’s very own co-exclusive listing, located at 834 Fifth Avenue, which closed at $53,000,000.
Closings have also started at various buildings at Hudson Yards – a real estate development in the Chelsea and Hudson Yards neighbourhoods of Manhattan built from the ground up and aiming to be one of the city’s main cultural centres.
New York’s newest neighbourhood, located on Manhattan’s West Side, is home to 100 diverse shops and culinary experiences, offices for leaders in industry, significant public art and cultural institutions including the Shed, as well as modern residences, 14 acres of public plazas, gardens and groves, and the world’s first Equinox Hotel.
Johnson says the neighbourhood is becoming ‘alive and vibrant’ as residents begin to occupy these buildings.
“This is shaping Manhattan’s West Side and will undoubtedly aﬀect market trends going forward,” she said.
“Overall, we anticipate a stabilization in sale prices, and buyers and sellers gaining conﬁdence in sales and acquisitions.”
New listings fall, but prices bounce back
After two quarters of increases in new listings, the third quarter of 2019 saw a fall of approximately 27% to 34% in listings in each of the Condo, Co-op and Townhouse markets in New York.
While the Condo sector had nearly 13% more new listings in the third quarter than the previous year, the other sectors showed a modest fall on the previous year.
The median list price, meanwhile, was down approximately 9% from the previous quarter for each market segment, although year-on-year median list prices varied from segment to segment.
Overall, the increasing trend in number of listings and prices that was evident for the previous two quarters reversed in Q3, the report found.
Following three straight months of declining median list prices in the Condo and Co-op markets, September witnessed a bounce back, with median list prices increasing by nearly 40% and 33% respectively.
The Townhouse market, by contrast, has been more inconsistent, with median list prices fluctuating over the past six months.
After a period of relative consistency, September witnessed a sharp growth in the number of listings in each category – to be expected as the autumn market begins and people look to sell before Christmas.
You can find detailed stats and information for each section of the market in the full PDF report here.
Is New York a buyers’ market?
According to a recent piece in The New York Times, Manattan’s real estate market is now a buyers’ market thanks to the volume of sales and the prices of condos and co-ops falling sharply in the third quarter, in almost every real estate category.
The New York Post, meanwhile, recently claimed the city’s real estate market is in freefall, which led to a passionate defence piece from Frederick Peters in Forbes.
CNN Business also ran an article saying how now was the ideal time for people to buy up their dream Manhattan apartment with prices plunging – down 14% from last year, albeit with the average sale price for condos or co-ops in Manhattan still standing at $1.66 million (around £1.2 million) during the third quarter.
Manhattan, one of the five boroughs which make up New York and home to most of the city’s big-name attractions, is typically very attractive to affluent homeowners and investors.
The general consensus seems to be that prices in New York have definitely taken a hit of late, but are now stabilising and evening out, with long-term projections reasonably good.
New York’s reputation as one of the world’s great global cities, probably only on a par with London, should also see its appeal to investors (both overseas and domestic) continue to thrive.