Recorded on location in New York City. The latest market statistics from NYC indicate a market that has peaked about a year ago and is now firmly in a downturn. We’ve gone through several years of high demand and short supply. Developers have responded with the introduction of new product, aimed largely at the upper end of the market. There is ample evidence that developers having mis-read the market demand. There has been a ton of new construction in recent years in NY. Many of those new units are priced at 30%-50% above the average sales prices in the area. They are having a difficult time selling.
If you’re an average tech worker in NY, maybe at Google or soon at Amazon, earning $120,000 a year, you can probably afford a property just about $800,000 in purchase price. That’s well below the median purchase price anywhere in Manhattan.
Several of the brokers that I’m tracking in the NY area are reporting that luxury properties are having a hard time selling. While the median price is high, we have seen huge price reductions for properties that have sat on the market for 12-18 months. Several luxury properties reported by the Corcoran Group have seen prices reductions of 30% or more.
Even in the mid-market, we have seen a 4.5% price decrease in the past year and inventory is up 23% compared with last year. Much of that increase in inventory is in the new property market. Sales are at their lowest level since 2011. 2011 is seen by many as the bottom of the market in the last downturn.
It’s hard to look at a 1BR condo priced in the millions as a bargain. But relatively speaking there may be some better pricing emerging in the market in the months to come.