Stribling & Associates is out Tuesday with its first quarter of 2019 Manhattan Market Report, which revealed the continued slowdown in total sales, which saw a yearly decline for the sixth straight quarter, but noted an uptick in contract activity, in what could be a promising sign for the Spring market ahead.
"The first quarter of 2019 performed much like the previous four quarters," said Garrett Derderian, chief data officer at Stribling. "The difference now is borough-wide sales prices do not reflect current market conditions." This phenomenon, where the overall sales price is increasing amid a market-wide slowdown, has been building over the past several quarters.
The total number of sales, at 1,821, was down 11% compared to the same period one year ago. The report showed that as sales slowed, discounts were on the rise. In the first quarter, the average discount from initial list price to sales price was 9%. However, all properties that sold for $1 million or more recorded double-digit percentage discounts, with the greatest being for home sales $20 million and above, which average a 27% discount.
Closings at super-prime developments, including 220 Central Park South, have caused the Manhattan-wide average to climb despite abundant market discounts. These units initially entered contract up to several years ago when the market was stronger.
"It is much more important to look at contract activity when judging housing conditions. The increase of the average sales price is an inaccurate market indicator. With that said, there was a 4% increase in contracts signed, positive news for the market," said Derderian.
Still, it is the price brackets that are seeing an increase in the number of contracts that are the most important to understand current conditions. All price brackets up to $3 million recorded a percentage increase in contracts, as did the bracket for deals $20 million and above. The greatest price weakness was observed in the $3-20 million tranches, where much of the new development market is priced.
Contract activity for properties priced between $3-5 million dropped 14% in Q1, while the $5-10 million bracket was down 12%, and sales priced between $10-20 million dropped the most, at 20%. According to Derderian, "There is a real trepidation regarding the sheer number of units that are, or will be, coming online at these price levels. The market simply cannot absorb all current and upcoming inventory, new development and resale, at a pace that can sustain these prices."
The report also indicates that we may now be reaching a point of inflection, as sellers price more aggressively to the current market and buyers reengage. That, in addition to the recent slide in mortgage rates, could bode well for a stronger Spring market.
Highlights from Stribling & Associates 1Q Manhattan Market Report: