Buyers have the upper hand this home-shopping season. (Alexander Spatari/Getty Images)
The number of homes available for sale on StreetEasy has risen sharply over the past three months to a record high, giving home shoppers more options to choose from than at any point in the past seven years. But while more New Yorkers have decided that 2018 is the time to sell, fewer transactions are taking place than in years past. With another wave of NYC home inventory set to hit the market this fall, sellers will be motivated to either meet the terms of interested buyers or cut prices as units linger on the market. All of which means that this year, home shoppers may have the upper hand.
The cause of this surge in inventory is still unclear, and it will be months before we know whether this home-shopping season will mark a change in the direction of the market or a mere hiccup in NYC’s rising prices. But one thing is certain: the trends that have led to this year’s high inventory numbers unmistakably favor buyers. If you’re thinking of buying a home in NYC this year, here are five things to know about the surge in homes for sale.
Be Picky: Inventory Is Up Across Neighborhoods, Price Points and Home Sizes
No matter what type of home you are looking for, there will likely be more to choose from than in past years. And while New York remains one of the world’s most expensive cities, this year’s for-sale inventory includes a significant number of units at lower price points.
June inventory priced between $500,000 and $750,000 rose 39 percent from 2017 in Manhattan and 32 percent in Brooklyn. Even the number of elusive 2-bedroom apartments priced below $1 million rose 25 percent in Manhattan and 20 percent in Brooklyn.
The increase was also geographically widespread: nearly 3 in 4 neighborhoods we analyzed with at least 10 units listed on StreetEasy saw an increase in inventory since last year. Forest Hills, Greenwich Village and Clinton Hill were all among the neighborhoods seeing increases of more than 25 percent from last year. In total, 47 of the 122 neighborhoods in Manhattan, Brooklyn and Queens with at least 10 units listed on StreetEasy saw for-sale inventory increase by at least 25 percent from June 2017.
Shop Around: The Inventory Surge Is Driven by Newly Listed Homes
The bulk of listings available in June 2018 in Manhattan, Brooklyn, and Queens were initially listed in April, May, or June. Nearly half (48 percent) of the Manhattan listings on StreetEasy in June 2018 were listed in the past three months, compared to just 35 percent of the listings available in June 2017.
While high-priced units lingering on the market and new development have pushed inventory on StreetEasy gradually higher since 2013, the spring bump is a clear break from this trend. There remains no shortage of luxury properties for sale, but the higher inventory numbers are a result of newly listed homes at relatively accessible price points.
Be Patient: More Homes Are Coming in the Fall
If the right home for you is not among all of the wave of listings added this spring, hold tight. April and May are perennially popular times to list a home both nationwide and here in New York, and this year’s inventory numbers show that many sellers timed their listings with the peak season. Listings in New York tend to drop in mid-summer, when many residents skip town for destinations out east, upstate, or elsewhere. A second wave of inventory typically comes to market in the fall, and there’s reason to think this year’s may be big.
More Manhattan homes were listed for sale last September than any in StreetEasy history, and that increase seems to have foreshadowed this year’s record high inventory. With more sellers hoping to optimize their market timing, we expect inventory to again hit historic highs this fall.
Sales Are Low, So Expect Discounts in Coming Months
Many sellers are growing nervous, which will give buyers the upper hand through the fall. The recent spike in inventory coincides with a longer downward trend in closings, driven in part by a shortage of homes for sale at price points within reach of a significant portion of New Yorkers.
Manhattan sales hit their lowest level since 2009 in the first quarter of 2018, and the early numbers for the second quarter of 2018 are trending lower. We’re a long way from getting a full read on the June numbers, due to the recording delay in closings, but the longer-term downward trend is likely to remain in place. Inventory will likely continue to build up on the market, favoring buyers. And with inventory growing and sales falling, buyers should expect to see more price cuts — and more sellers willing to make concessions.
Negotiate Hard, Because the Future of Prices Is Uncertain
One thing we haven’t yet seen is the large increase in inventory translate to lower overall prices. According to our StreetEasy Price Index, sale prices rose in May from the previous year in Manhattan, Brooklyn, and Queens. But while NYC remains one of the country’s most expensive housing markets, well-prepared buyers should be in a strong negotiating position as sellers begin to get nervous.
The resiliency in prices could be an indication that an expanding economy with strong job growth has created an enormous amount of pent-up demand for homes. Should that be the case, the boost in attractively priced inventory should result in higher sales numbers in the coming months.
Alternatively, it could be that this spike in inventory represents a turning point in the market, with sellers — including investors — looking to cash in before prices slide. If that’s the case, we’re likely to see an enormous buildup in inventory by the end of the year that will result in lower prices come late fall, when sellers will reluctantly begin to lower their expectations to attract demand.
For potential buyers, it may be tempting to wait and see if prices fall later this year. But finding a home in New York City is a complicated and deeply personal process. Buyers should enjoy the enhanced bargaining positions afforded by this year’s record inventory, and use the selection of homes for sale as an opportunity to find the one that best suits their needs without fear of missing out. Any purchase of a NYC apartment is an investment, but those looking for a place to call home — not just a quick buck — are likely to profit in the longer term from the city’s growth.
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