As the second quarter began, New York’s real estate market awakened from the doldrums and deals in all price categories began to emerge. Inventory, which saw a modest increase over the spring, remains spotty. Plenty of properties needing work remain on the market; the New Yorker’s desire to buy mint condition has not abated as they see both construction prices and supply chain issues impact the cost of renovation. A decade ago, a nice renovation could be executed for $300 per square foot; the price for that same renovation now sits closer to $600 per square foot, and more high-end, name-designer or architect-driven projects can easily run to $1,000 per square foot. In this environment, price drives absorption more than any other factor. That said, new condominiums remain popular as buyers will still pay a premium for a move-in-ready experience with superior amenities.
But determining the ACTUAL sales price of any condo remains tricky. Developers, who are acutely conscious of the way closing prices drive sales, constantly make deals with invisible concessions. The recorded sale price of any new condominium apartment may not reflect changes the developer has agreed to make to the unit, transfer and mansion taxes they have agreed to pay, or lawyer’s fees they pick up. And during the post-COVID period, the same has become true for co-ops: boards will often insist that, to approve a deal, a contract price be artificially increased, only to be settled at the closing by the allowance of a “renovation credit” given by the seller to the buyer to bring the price back down to the agreed-upon amount.
During the spring months, sales at $4 million and up substantially decreased relative to the same period a year earlier. Over the eight weeks ending in mid-June, these sales declined 11% from those during the previous year (Olshan Luxury Market Report). At the same time, a modest uptick in the larger sales ($8 million and above) reflects the ongoing commitment of many wealthy individuals and families to building a life in the city.
Meanwhile, inventory in the smaller apartment market (priced at $2 million and below) ticked up between 15% and 25% since the year began, indicating slow absorption combined with a typical spring jump in new listings. These properties, more than those at higher price points, are highly sensitive to interest rates, since most buyers in this category are financing.
Do you have any questions, and do you want to talk about the NYC market? If so, please reach out, I’d love to hear from you.
Best regards,
Jane
