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Today we are translating the tea leaves (courtesy of the ultimate harbingers of real estate - Urban Digs) which clearly show that we have begun a trajectory that none of us could have foretold six months ago.
There are two categories you need in order to dependably predict the future:
Pending Sales and New Supply.
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So if you are transacting in New York, consider your fortune told....
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Note that pending sales historically peak every June/July, however
January/February 2021 pending sales are already exceeding annual highs.
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- Properties coming off the market without selling have also increased, further reducing an already diminishing inventory.
- Buyers can assume that we have hit peak supply, and that their negotiating leverage will continue to diminish going into the Spring market.
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THE "MARKET PULSE"
is simply a ratio of pending sales to available listings, which tells us who has the leverage. For now, the pending sales are surprisingly outpacing the supply.
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This chart shows (in addition to the height of the market in 2014) the 2020 lockdown, then normalization and recovery.
Additional new listings will inevitably come on the market in Spring, but if the rate of sales continues to climb as it has, we are likely on our way to what analysts consider a "seller's market". I needn't tell you what this means for prices.
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TAKEAWAYS:
BUYERS: Lock it down before the ice melts. Things may not be moving in your favor, but the party isn't completely over yet.
SELLERS: Think it's not a good time to sell? Think again and get going. The season has already begun, and buyers are hungry for your "inventory".
The most immediate indicators of rising prices are experientially known only to active agents:
1. overbooked open houses
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multiple bidders,
3. emails from agents desperately seeking specific inventory
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Well before the press or even the analysts report on what has eventually transpired, we have read the writing on the wall. All three of these indicators have been happening intensely for the past several weeks.
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Rumors of New York's Demise
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have clearly been exaggerated. But extremely discounted luxury sales are what make the headlines. Here are a few wild examples:
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This Penthouse at Walker Tower which sold in 2014 for $50 million, sold last year for $18.25 million (the Justice Department seized the property in 2016, alleging that the unit was bought with money stolen from Malaysia’s sovereign wealth fund, 1MDB).
The condo board tried to block the deeply discounted sale by exercising its right of first refusal, but was denied by a judge.
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The 88th Floor at the One57 condo along Billionaires’ Row sold for $28 million in 2020 - nearly $20 million less than it did five years ago.
However, this likely does not reflect the true market value. Property records show the deal was struck off-market and between two related parties within the same Chinese conglomerate.
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508 West 24th PHA originally sold brand new in 2015 for $9.5 million after being listed for $12.5 Million.
It came back on the market in May 2018 for $12.8 million, and finally sold in 2020 for only $5.45 million. The monthly carrying costs here have gone up over the years and are nothing to sneeze at, which contributed to the price reduction. I still think this buyer hit the jackpot.
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High-end price cuts in 2020 were plentiful and well-publicized. There have also been more subtle discounts below $4 million, but they never got to the level that many buyers had hoped for, and already seem to be fading away.
Until next time,
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© Compass 2021 ¦ All Rights Reserved by Compass ¦ Made in NYC
Compass is a licensed real estate broker. All material is intended for informational purposes only and is compiled from sources deemed reliable but is subject to errors, omissions, changes in price, condition, sale, or withdrawal without notice. No statement is made as to the accuracy of any description or measurements (including square footage). This is not intended to solicit property already listed. No financial or legal advice provided. Equal Housing Opportunity. All Coming Soon listings in NYC are simultaneously syndicated to the REBNY RLS.
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