The NYC real estate market slowed down in February. After reaching records in December 2015, prices came down in January and February, which in itself did not necessarily mean a softening market. First quarter is usually slower, reflecting the winter season. I had the pleasure of having breakfast with Jonathan Miller last week, a highly respected voice in the NYC real estate world. His opinion is that the 3+ million segment is no doubt coming down. The question is whether this will affect the lower priced buckets. Mr. Miller thinks the answer is no for these reasons:
- Manhattan population growth is 5 years ahead of projections
- Manhattan is enjoying its highest level of employment now
- Credit conditions are still tight so many home owners are not able to get financing to upgrade
The fundamentals that support the current market levels are still intact. The January market rout dampened everyone’s mood to go out and buy an apartment, but this should be temporary, as long as our economy remains strong. This is somewhat similar to the Chinese story – quite a few Chinese investors pulled out of their investment deals when the currency depreciation and stock market turmoil first happened last fall. But we are still seeing plenty of Chinese buyers. By now people are coming to terms with the new reality, whereas the underlying demand for global asset allocation remains the same.
What does this market look like in English? Sellers need to be realistic about pricing and accept longer marketing times. Buyers have less bidding wars to contend with but it is still the norm for good apartments to go within weeks.
For all the investors out there, in case you missed this Times article about new emerging neighborhoods