Last week, we reported “news” of the worst performing week for NYC residential real estate demand since that ending December 27th, 2020. But news it was not, or so we opined, being nothing more than a carryover of the seasonal holiday slump.
However, this week, the results are even worse and we may need to actually fire up the printing press this time. Whereas last week’s demand, as measured by number of signed contracts, was down –17% compared to its pre-pandemic average*, that number slid further to –20% this week, the lowest level of demand since the week of July 19th, 2020.
Is it time to revisit the “canary in the coal mine” idiom? It’s too soon to say, but we’ll certainly be keeping a close eye on this metric during the coming weeks.
* the period 5 Jan 2015–1 March 2020
Manhattan Supply
The seasonality of supply is clearly illustrated below. Except for 2020, there are, annually, two defined peaks — one in Spring and the other in Fall — and two equally distinct troughs in Summer and Winter. Interesting, too, is that the peaks are of nearly identical magnitude and duration, and the same can be said for the troughs. During 2020, however, the typical Spring surge was replaced by a void as sellers held back supply in anticipation of what impact COVID-19 would have on consumers. By July 2020, trepidation was replaced with haste as buyers flocked to NYC and sellers rushed to meet that demand with the largest Fall supply spike on record, accretive of the delayed Spring peak. Having moved back into step with its historical cadence, NYC is currently experiencing the typical Winter trough with 5,931 residences for sale, including the 289 new listings that were posted this week.
Chart courtesy of UrbanDigs
Brooklyn Supply
Although skewed by the atypical nature of 2020, also exhibits the bi-annual cycle we described for the Manhattan market. As expected, supply has reached the seasonal winter low, with 2,860 units currently on the market, which includes 182 new listings.
Chart courtesy of UrbanDigs
Manhattan Pending Sales
Like supply, demand displays a distinct seasonality with two crests and two troughs each year. As the below illustrates, 2020 jolted the system and we expect Manhattan is finding its historical pattern. Typically, pending sales reach their lowest level in February so at 2,255 units, we expect the metric will soon bottom and then be on its way to the June peak.
Chart courtesy of UrbanDigs
Brooklyn Pending Sales
Without a historical pattern to reference, we’ll assume pending sales in Brooklyn follow those same patterns that describe Manhattan. As such, the metric — at 1,543 units this week — is approaching the seasonal February trough and will peak in June.
Chart courtesy of UrbanDigs
Manhattan Contracts Signed
During Q2–2022, rising mortgage rates quickly began letting air out of the overinflated demand balloon. During Q3–2022, demand passed below its pre-pandemic benchmark and there it has remained ever since. This week, the number of contracts signed, 124, was –27% lower than that historical average.
Brooklyn Contracts Signed
As it has done four times previously since recovering from the COVID-induced trough, demand for the borough appears to be retreating from its most recent peak and reverting to the pre-pandemic benchmark. The number of contracts signed this week, 68, was at parity with that historical average. Whether demand for Brooklyn can surge again for a sixth time is yet to be seen.
New Development Insights
As reported by Marketproof, this week, 34 new development contracts were reported across 28 buildings. The following were the top-selling new developments of the week:
- 300 WEST 30 STREET (Chelsea)
- 450 WASHINGTON (Tribeca)
- THE NEWKIRK (Flatbush)
