Manhattan is no stranger to a short supply of homes. This year however, has been an outlier in terms of shortages: there simply is no inventory. The supply-demand dynamic in the Manhattan housing market is currently skewed. A healthy demand for homes from both domestic and foreign buyers paired with the low inventory leads to sellers getting higher prices and buyers left with little to choose from. In the past few months we have seen quite a few bidding wars, one of which resulted the sale of our listings at almost 15% over asking price.
The lowest inventory in the last decade should not come as a shock. We have seen Manhattan’s inventory steadily decreasing since 2008 as the new developments that were in the works were shelved in the wake of the financial crisis and would-be sellers held their homes to avoid the tough market. Manhattan is not the only market with a shortage of homes for sale, the national inventory is at a 13 year low.
With financial markets rebounding, we have seen many of the new developments that were shelved get a breath of new life in the past year. There are a significant number of new developments that have come to market currently being offered at pre-construction prices. 56 Leonard, 432 Park Avenue, One57, 35XV, as well as many others (For the full list of New Developments and current availability, please contact Noel Berk) are attracting a huge demand from domestic and foreign buyers looking for consistent returns and a stable and secure investment. New construction however, only consists of 10-20% of the total supply in the market.
As the demand for housing in Manhattan is not going away, we can expect a shortage in supply will remain until the new developments currently in construction open their doors and new projects come to market. As rent remains high, and interest rates will not remain as low as they are currently, we can expect that willing buyers will not wait much longer.
If you are a seller looking to get the most out of your residence, now would be a great time to list it. Not only are there a multitude of willing buyers but there is a number of great new developments just coming to market for you to trade up to.
If you are a buyer, it is important to understand the current conditions of the market and do the work ahead of time. You will have to act fast if you want to get the deal done. If you are taking a mortgage, make sure you have been pre-approved by the bank, and keep your documents and lawyer ready.