- A new mayoral administration, a surge in construction, and rising mortgage rates shape the market in 2014.
- Luxury developments built within the last ten years will peak in regards to value. The smart money move would be to offload this property while the city’s lack of inventory . The median sales prices in condominiums rose 14.3% Q4 of 2013 which should carry into the new year.
- Deals can be found in purchasing new developments at pre-construction prices – before prices increase as contracts are signed.
- Savvy buyers looking to find value should look to new developments selling at prices ranging from $2,000–$3,000/s.f., as these investments will hold their value through any fluctuations the market may present.
The major themes of 2013, were low inventory, bidding wars, and record setting prices. The market was driven by a record shortage of inventory coupled with a large pent up demand for properties throughout Manhattan. A strong local economy, stock market gains, and a continued interest kept demand strong. Despite the low inventory, sales managed to rise 26.8% in Q4 of 2013 – even greater than last year’s Q4 rush to close before the new tax laws took effect. However strong these themes proved to be, the surge of new developments certainly defined the market in 2013.
After a short dry spell over the past few years, the city has seen a great deal of new construction projects break ground. The market responded to the new developments by signing contracts. The numbers speak for themselves. In fact, the number of contracts signed on new development projects increased 20% compared to this time last year – with many buyers looking to get in at the best prices while the project is still in the construction phase.
Only 49 residential buildings were opened in 2013, creating 2,269 new units. Although this is more than the 1,309 units that came to market in 2012, it is still short of the 3,000 unit average normally required to meet demand.
Building permits for new developments continued to increase in 2013, with filings for 3,399 units through the first 10 months of the year. With this in mind, the market could continue to see strong sales in new developments into the new year. This should help alleviate some of the supply problems by balancing a market stared for fresh inventory. There is a group of great new development projects that have recently come to market. Of these, a few stand out: The Greenwich Lane, five condo buildings and five townhouses on the former St. Vincent’s lot, 505 West 19th Street, a ground up project that will consist of one building on the West side of the Highline and another on the east side of the Highline, and 33 East 74th Street, six historic row houses which were owned by the Whitney Museum that are being converted to condos. It is also worth mentioning how well some of the new downtown projects are doing. 56 Leonard, an 821 feet tall, 60-story skyscraper designed by Herzog & De Meuron currently under construction in TriBeCa is currently 90% sold. 150 Charles Street, a 91-unit tower in the West Village designed by Cook + Fox Architects, has been completely sold out.
432 Park Avenue
The Greenwich Lane
10 Madison Square West
What To Expect in 2014
One57…Better Than We Thought
Despite our initial concerns of the location for Extell’s One57, the rise in new residential construction on the 57th Street corridor have changed our minds. After recently previewing the construction site and seeing some of the finished residences, we believe One57 would make a great investment. The 92 units are well laid out, featuring high ceilings, immaculate finishes, and expansive views.
We expect inventory in 2014 to increase but not to the levels that will meet the current demand. The growing number of new construction projects will continue to offset the demand over the next few years, however, with interest rates on the rise housing price growth should slowly return to a more sustainable level. Q4 of 2013 showed an increase in average sales price by 5.3%, with median sales prices in condominiums by 14.3%. There is still time to capitalize on obtaining the best price for your property. With changes to the mayoral administration and their proposed changes in policy, coupled with decreased leverage of free money from low mortgage rates – time may be of the essence.
We look forward to 2014 and wish you and your family the very best in the New Year.
As always, if you want to talk real estate, please feel free to get in touch with us:
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