A: Deal volume across Manhattan continued to surge as we finished up the month of April, rising 15% from the month prior and booking 24% 'more deals' when compared to April of last year. Supply on the other hand is showing its first signs of "ticking up", as sellers may finally be heeding the call to list property to meet current demand. All in all, its been a crazy active season so far in 2013 especially in the submarkets that typically outperform the broader trend; i.e., Tribeca, Soho, West Village, etc.. Price action is on the rise but at a lag to real-time inventory trends, so expect the Q2 and Q3 market reports to show higher median sales #s. Lets go to the data.
First, lets take a look at MANHATTAN MONTHLY CONTRACT ACTIVITY since 2009:
-- Deal Volume rose +24% from April of 2012
-- Deal Volume rose +15% from March 2013
April is typically an active month for Manhattan real estate and sees around 1,000 - 1,100 new deals signed into contract. So far this April, we fell just short of putting 1,500 new deals into contract -- indicating a feverish kind of marketplace.
Where are the deals happening??
According to the UrbanDigs.com real-time pending sales system, the following 5 Neighborhoods saw the biggest % change in Total Pending Sales during the course of April:
1. Battery Park City - pending sales +82.4% in April
2. Murray Hill / Kips Bay - pending sales +30.6%
3. Harlem / Hamilton Heights - pending sales +26.9%
4. Tribeca - pending sales +26.3%
5. SoHo / NoHo / West Village - pending sales +25%
Moving on to New Supply trends, let's first check in on Manhattan-wide and talk about something that hasn't happened in a while -- A TICK UP IN NEW SUPPLY!
-- New Inventory hitting the market rose +18% from April of 2012
-- New inventory hitting the market also rose +18% from March 2013
This is a welcomed sign although it probably won't feel like more stuff is coming on unless this trend continues for at least a few months longer.
Which neighborhoods saw the biggest % change in new inventory over the course of April? According to our system these are Top 5 Neighborhoods in Manhattan that saw the highest % change in Active Supply over the course of April:
1. Lower East Side / E Village / Union Square - active supply +20.6%
2. Harlem / Hamilton Heights - active supply +18.9%
3. Fidi / Civic Center - active supply +13.6%
4. SoHo / NoHo / West Village - active supply +13.1%
5. Gramercy / Flatiron District - active supply +11.6%
The tick up in supply is welcome but in its infancy regarding it being a trend. It seems sellers are starting to listen and the real-time Manhattan market ticker continues to show the pace of new supply coming on at strong levels; so expect that pace to continue for the time being.
I am still finding buyers frustrated at the options available to them and in competition with other buyers for quality product that is priced right. This is especially true in the downtown markets like Tribeca, Soho, Village, etc.. With equities soaring to new record highs, there simply is a lack of fear out there and no external force to push new demand to the sidelines.
Sellers would be wise to take advantage of the leverage that has shifted to their side by pricing properly. Pricing too high is a sure-fire way to miss the action that seems to be underway.
If I were to throw out a #, I would say today's market is trading up roughly +9% to +12% from year ago levels and perhaps in the +15% to +18% range from 2 years ago -- largely a function of tight supply as most other asset classes continued to soar. From the lows in early 2009, all price points have recouped much of their losses that were realized at the height of the credit crisis. I would argue most price points in the midtown area & north are still trading below peak levels from 2007, while the typically desired neighborhoods like Tribeca, Soho, and West Village are seeing pockets of strength that are testing new highs -- it all depends on the property's unique characteristics.
Buyers are paying up for renovations and views and not bidding up for combination sales or low floor/dark apartments. So it is critical that you understand the product you are selling and how best to take advantage given current market conditions out there. Expect price action to rise for another 3-4+ months as the pipeline of deals start to close and filter into the firm's market reports.