Each month I write the O'Leary Market Report to highlight the real estate news here in NYC. We are a little less than two weeks away from Labor Day weekend. The fall is around the corner, but there is still some time to get outdoors and enjoy the warm weather. In the meantime, here are some notes from the NYC real estate market to keep you informed.
Seasonally, sales and rental activity in the NYC residential market tends to pick up towards the end of August, as both families and students return to the city from summer vacation. August is usually a month where a lot of real estate closings are happening for listings that hit the market over the spring. Typically, you don't see many new sales listings hit the market from July 4th through Labor Day, because potential buyers are more focused on things like vacations and bbq's. The slower summer tends to make September one of the busier months of the year when it comes to new sales listings hitting the market.
On the national level, after a decade of rising homes prices, home price growth appears to be finally slowing in nearly half of the 35 largest U.S. metropolitan markets, according to CNBC. CNBC mentions how approximately 14 % of all listings in June had undergone price cuts. This comes as a relief to the buyer market, however there is still fierce competition and limited inventory for homes priced below $500,000.
The overall U.S. economy is performing exceptionally well. The unemployment rate is down to just 3.9 %. The Tax Cuts and Jobs Act of 2017 has helped spark the economy by lowering the federal corporate tax rate from nearly 40% to 21%. Since the passage of the tax reform, businesses in America have increased wages, paid out bonuses, and have been making large investments. How this will affect the overall real estate market is yet to be seen.
Mortgage interest rates have remained relatively low, currently hovering around 4.5% on a 30-year fixed rate mortgage, this despite ongoing talks of rising interest rates that we have yet to see happen.
There's no doubt that the new tax law has created uncertainty for both sellers & buyers in New York state. Homeowners no longer have the luxury of deducting home taxes above the $10,000 mark. Under the new tax law, homeowners in high tax states like New York can still deduct up to $10,000 in state and local taxes, but not the unlimited amount, as they could in previous years.
Properties are taking longer than usual to sell in the city. In Manhattan, the second quarter of 2018 (March-May) brought a significant surge in the amount of new listing inventory compared to both the prior quarter and year-over-year.According to the 2nd Quarter 2018 Manhattan Market Report from Berkshire Hathaway, condos, co-ops, and townhouses all showed decreases in the number of contracts signed year-over-year. This despite more properties available for purchase this year.
The number of contract signings for condos has declined the most, by 27.1%. However, condo prices aren't getting much cheaper in Manhattan. The median sales price for a condo in Manhattan still found a way to increase to $1,795,000, up from $1,700,000 same time last year.
The average price per square for a condo in Manhattan is now $1,826. However, the price per square foot in Manhattan varies greatly, anywhere from $10,000 per square foot on billionaires row (W. 57th), to $500.00 per square foot in Upper Manhattan neighborhoods like Inwood.
On the commercial real estate side, major development construction activity continues around the city. Some of the major projects underway in Manhattan include continued development of the World Trade Center site(5 WTC), Essex Crossing in the Lower East Side, One Vanderbilt next to Grand Central, the Hudson Yards in midtown, 53W53 & 111 W. 57th Street on Billionaires Row. In Queens, Long Island City, Flushing, and Jamaica are a few neighborhoods with booming new residential and commercial activity. LaGuardia Airport is in the process of getting a major makeover.
In the South Bronx, developer Brookfield Property Partners is building a major new development in Mott Haven. The project includes 7 new buildings with 1,300 residential units. In Brooklyn, construction has finally begun on 9 Dekalb, notably the boroughs first major skyscraper, and the first to top 1,000 feet. JDS Development Group is the developer behind the new skyscraper. It will reach 1,066 when completed. Work has begun on the foundation of the property. Its expected to be completed in 2020.
If you have any questions about what is published in the article or if you are interested in renting, purchasing or selling a property, please connect with me.
Have a safe and wonderful rest of the summer and enjoy your Labor Day!