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Manhattan Mid-Year Grades | Depends on the Price Point Posted by Noah Rosenblatt in Current Events

So how is the mysterious Manhattan marketplace doing for the first half of 2016? As an overall market-wide grade, I give it a B-; call it slightly below average. We aren’t failing or anything like that but we certainly aren’t blowing away old volume records either. We are kind of chugging along after getting hit in the head with a 2 by 4 last Fall.

If the general market took a clean shot to the head with wood, getting a bit stunned in the process, then I would say the High-End/Luxury sector got hit in the head with a lead pipe and went down cold while the Low-End got hit with a paper bag and barely nudged. Manhattan has truly become a price point specific marketplace.

Here are the grades for each Price Point for first half of 2016

<$600K: B+ | Less than 10% of total inventory, this sector has been performing above average and has the lowest volatility of all price sectors

$600K to $1M: | Has the Lowest Days on Market of all price sectors at 55

$1M to $2M: A+ | Leads the pack with the best performance in year over year Pending Sales. Demand for this price sector continues to be very strong.

$2M to $5M: C | Had the largest jump in Days on Market versus the other price sectors up 32% year over year.

$5M to $10M: C- | Experienced the most volatility of all the groups with the ratio of Supply to Pending Sales jumping 31% from last year (indicating a quicker leverage shift to buy side)

$10M+: C+ | This sector was at a D- six months ago and on double secret probation, so consider this grade a recent improvement. But its crawling back with a recent comeback in Monthly Contract activity over the past 4 months. Keep it going high end, we love ya!

Now, lets get to the data. Here is a look at Manhattan Days on Market Trends when you break it down by varying Price Sectors:

*Sorry all but I did take charts shown below from our upcoming site that will be released to users soon

Every price sector experienced a longer time to move property to contract from year ago levels. But once you cross the $2M boundary and the $5M boundary, shifts occur as noted in the chart above.

This is a real-time market measurement. There are only 3, two others being Supply trends and Pending Sales trends. Lets take a peek at the latter, Pending Sales, which is a measure of real-time demand for Manhattan residential real estate:

 

You can see from this chart the sluggish start to 2016 in regards to deal volume. Luckily, the past 2-3 months saw a sustained uptick in new contracts executed, a trend that should have started back in February. But when you look close its clear that the only price sector to outperform noticeably on a year-over-year basis is that meaty $1M to $2M sector; accounting for 25% of  total inventory (the $2M to $5M sector has the most supply at 28% of total inventory). 

Now, the confusing part. Lagging Sales prices have been reaching new records highs while the real-time market saw a leverage shift to the buy-side. Sellers are seeing record prices + strong comps that closed in building over the past 12 months and naturally expect current conditions to support those levels. Fact is there is a disconnect between lagging price trends, lagging relevant in-building comps (4 months or older), and what is happening out there in the field right now.

Here is a 5YR Manhattan Median Sales Price chart showing the record levels in Q1-2016:

So to summarize…

  • Manhattan Median Sales Prices hit record highs early 2016 as a surge in Luxury New Development closings  filtered out of the pending sales pipeline
  • Real-time metrics paint a different story and show 2016’s performance to be below average with only the $1M to $2M sector outperforming YoY trends
  • The time it takes to sell property shifts noticeably higher at the $2M barrier and then again at the $5M barrier. The sub $2M market continues to see a strong pace of demand
  • As 2016 ends out we expect lagging Median Sales Price + PPSF pressure to be on the downside relative to record levels hit in Q1-2016

 

 

 

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