4Q15 Manhattan Market Report: Market Bifurcation

Posted by Julia Hoagland — January 4, 2016

1451931924NEW YORK CITY, NY - The Q4’15 market data illustrates the multifaceted nature of the Manhattan marketplace, to be expected in a market with $250,000 studios and $100,000,000 penthouses selling within blocks of each other. Smaller apartments saw time on the market and market share shrink, while $10M+ inventory took longer to sell. Overall absorption rate decreased 23% to 6.8 months. While prices increased to new highs, of note is the fact closed pricing data on new developments is a lagging indicator of sorts: in many cases a reflection of the market 12-18 months ago. 2015 was the first year building permits exceeded those of the last peak in 2008. Separately but related, it is difficult for developers to justify building rental buildings given the cost of land; while new condo development increases, rental inventory may decrease. If tenants have less choice, this benefits investors (supply down, demand constant: pricing up). Market highlights:

  • Inventory is down 13.0%; the lowest level in eight quarters
  • $10M+ listings were 7.2% of market share; 95% more than the 10-year 4% average
  • Condo inventory decreased 17.3% | Prices increased 25.0%
  • Co-op inventory decreased 11.0% | Prices increased 6.0%

The Fed raised the target Fed Funds rate 25bps in December. While ultimately a mortgage rate increase may follow, this typically requires an uptick in inflation, which leads to a decline in the value of mortgage bonds, and a corresponding increase in mortgage rates. Inflation is still well below the target 2% considered still healthy by the Fed—stay tuned.

For more details, please see the comprehensive Compass 2015 Fourth Quarter Market Report.

About Julia Hoagland

Julia Hoagland and her team bring expertise to the Manhattan marketplace through extensive data examination and thoughtful interpretation. Julia Hoagland + MLLP earned 2015 Team of the year in their Lever House office and 2014 and 2013 Team of the Year in their prior firm's headquarter office. They regularly rank in the top 5% of their firm’s brokers and received the 2009 President’s Award for demonstrating expertise in the field. Julia and her team are recognized experts in the industry and have been featured in The Wall Street Journal, The New York Times, Crain’s New York Business, The Mann Report, The Real Deal and Avenue Magazine.

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