Buyers hoping that the Manhattan condo market would cool by the fall may be in for disappointment as August data points to more of the same from spring and summer 2014: less inventory and higher prices.
The total number of condos listed on the market in August fell by nearly 5 percent from July, a slow-down that typically occurs during the summer months. In an encouraging sign for buyers, August inventory was 5.8% higher than year-ago levels – the largest year-over-year increase in nearly five years. A long road remains in the recovery of condo inventory, however, as the August level was nearly 20 percent below Manhattan’s 5-year average.
The stubbornly short supply of condos sent price growth to a record high in August. According to the StreetEasy Condo Price Index, condo sale prices rose 0.4 percent from July and nearly 9 percent compared to last year – capping a summer that saw three straight months of price appreciation. Upward movement in prices was also felt in August’s existing inventory, in which nearly half (47.1 percent) of all units were priced above $1.84 million. Slightly less than one in four (22.3 percent) available condos were priced below $907,000, the cut-off for the bottom price tier in August.
Sellers appear to have little trouble finding buyers as the typical amount of time to enter into a contract. The median time on market in August was just 63 days, unchanged from July and 7 days longer than last year. This is nearly half the amount of time it took for condos to go into contract at the last market peak in September 2007.
As the market moves into the fall season, prices are expected to hold as the modest inventory gains of spring and summer failed to correct a two-year drought in condo listings. According to the StreetEasy Condo Price Forecast, prices will remain essentially unchanged in September, growing by 0.1 percent from August. Without a substantial reversal of Manhattan’s two-year long inventory slump, buyers should not expect to see much relief in either prices or heated competition for the limited supply on the market.