The frenzied pace of the New York City sales market is calming down, a result of more listings on the market and slowing demand. With less competition, buyers have gained some breathing room—they can take a day or two to make an offer—something not possible in recent months.
It’s not exactly a swing from a seller’s to a buyer’s market, at least not yet—it’s more like a nudge. That slight momentum may be enough to open a “window of opportunity” this summer as John Walkup, co-founder of UrbanDigs says in a recent blog post. You can expect a slower pace to return this summer, when market usually takes a pause for vacations. (Unlike last summer, when third quarter Manhattan sales saw the highest quarterly total in more than 32 years.)
“With supply rising, expect discounts to rise again this summer, especially if there are fewer buyers competing against each other, Walkup writes.
Up until recently, demand from buyers meant even as listings ticked up, they were just as quickly snatched off the market. But that’s changed, Walkup says. “The number of new listings coming to market each month minus units signed into contract or taken off the market—is on track to notch three positive months in a row for the first time since the reopening post-Covid,” he writes.
In real terms, that means buyers have more choice. “Instead of seeing one or two possible listings popping up in their feeds each week, they might now see a handful,” he says.
Another real estate report also tracks this shift in the market. In the latest edition of the Elliman Report, Jonathan Miller, president and CEO of appraisal firm Miller Samuel and the author of the report, notes that new signed contracts for Manhattan co-ops, condos, and one-to-three-family houses has slipped year over year in four out of the past five months—a lack of listings has been to blame, up until now. With the May report, Miller notes, "the rise in mortgage rates in recent months has enabled a year-over-year addition of new listings to the market in May.”
Buyers less eager to rush into deals
The rising cost of mortgages and fears of Covid’s resurgence in the fall are dampening buyer’s eagerness to rush into deals. As a result, the negotiating process is taking a little longer, says Dawn David, a broker at Corcoran.
“I find that buyers are shopping a little bit longer, taking a little longer to pull the trigger. They’re going home to sleep on it,” David says. She’s currently doing a deal for about $1 million and the buyer was able to negotiate a more favorable price.
That’s a change from the hyper pace of just a few months ago. Case in point: David represents sales at The Wales, a hotel-to-condo conversion at 1295 Madison. The building sold 30 percent at a soft launch in January—with no model unit or sales gallery. Buyers were “climbing over each other,” she says.
A return to seasonality
Part of reason buyers are feeling less inclined to rush is seasonal. “Things have slowed down, like they do usually in summer, especially in the luxury market,” David says. “But smart buyers will still look around while everyone is still at the beach.”
Pent-up demand lead to a record-breaking number of deals in the last two quarters, says Kimberly Jay, a broker at Compass. Now, she says, “[W]e are likely in a more normalized market heading into summer. This will probably continue. Buyers are cautious, not wanting to overpay.”
That means sellers who price properties too high are “setting themselves up for failure in this market,” she says. “I’ve been in this business for 14 years and have found sellers who price right, especially in summer and during holidays, always get deals done,” she adds.
Where you will find negotiability
Leslie Singer, a broker at Brown Harris Stevens, is also seeing buyers gain a little more breathing room. “They can take a few days to think now,” she says.
But much depends on the type of property you’re looking at. For luxury new development, considering rising construction costs and the fact that there are fewer projects coming to market. If you see something that’s turn-key, you’re not likely to have much negotiability, she says. (A new development report from Corcoran projects NYC will add fewer housing units than the usual in the coming years.)
For buildings with higher carrying costs, on the other hand, there may be some room to negotiate on price.
Frederick Warburg Peters, president of Coldwell Banker Warburg, sees buyers gaining some negotiating advantage.
“The pace of the market, throughout all price ranges, has slowed significantly in the second quarter,” he says, and with spring listings, there are more properties for sale than at any time in the past year and a half. “So buyers have more to look at, and with the larger inventory of options, there are more opportunities to negotiate,” he says.
But those discounts may not offset the higher cost of borrowing and declines in the stock market portfolios, he says.
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