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What’s really going on? First, is anyone talking about Mayor?….uh, NO ONE! Seriously, the only people who are actually talking about him are the people who are not actually transacting in the marketplace…the spectators, the looky-loos. Those who are actually engaged, whether buying or selling, are focused at the task at hand. Now, could some issues arise that could affect the marketplace?…sure. But let’s put it into perspective. We have dealt with the financial crisis AND a pandemic and I think we are doing just fine. Does anyone think that the new mayor could be worse than those events? Anyhow, since he’s not overly relevant at this time, let’s move on.
Again, where are we. In considering both the median and average prices, we are up ~ 2% YoY. Why is that? It’s been driven primarily because of constrained inventory, down approx. 4% since last year. Although there is plenty to buy, supply is indeed at a nearly 10-year low. Particularly of interest is the new development condo inventory which has been contracting with no improvement in sight.
Regarding the upcoming New development inventory in Manhattan, Brown Harris Stevens Development Marketing “projects an average of just under 1,300 units to come online in each of the next two years, less than the total contracts signed this past year.” That is…well…WOW. And 2025 was considered a “dull” when it comes to deal volume.
Although there is clear evidence of improvement, ever since the interest rate spike nearly four years ago, the market pulse, as exhibited in this chart from UrbanDigs, shows a market that is still in the neutral zone of “blah” activity. That said, there is tremendous optimism in the air. Unless we experience something abnormal like the pandemic in 2020, the Ukraine war and sky-rocking mortgage rates in 2022 or the anxiety of tariffs and liberation day from 2025, we are anticipated to have a very strong year.
1) The economy is strong, led by Wall Street, which according to the NYC Comptroller’s economic/finances report is projecting bonuses to be $49.7 Billion, 8% higher than the record set in 2024;
2) There’s been a marked improvement in sentiment as a result of more favorable mortgage rates, in the low 6% range, as opposed to the 8% we saw 27 months ago;
3) Inventory should improve; sellers who have been waiting to sell for years are preparing their properties for the market.
4) Mortgage applications are up. Meaning, buyers are suiting up for action.
Yes, the data tells us a mixed story with different factors favoring each side, among buyers and sellers. What that means is that the market remains quite fair…taking into consideration, of course, that “tie-goes-to-the-runner” concept I introduced last month, meaning that the chronic constrain on inventory leans the leverage in the seller’s favor.
So, both inventory and demand will improve. The question is, which force will prevail? Will supply outpace demand or demand outpace supply…we’ll see. I am betting that demand will be the stronger catalyst. One thing is for sure, increased deal activity will put upward pressure on pricing.
Let’s Go Shopping! ®
Anyone interested in buying or selling, should be rolling up their sleeves to determine whether the time is right to sell or if there’s a home/investment property out there for them. Who represents you matters…your best investment is often in the broker you choose; find someone with experience, who you feel you can trust.
