In recent months I talked about new condominium developments being built. For example several luxury skyscrapers are coming up on 57th Street. But even adjusting for these new constructions, the market is still in need of new “inventory” – i.e. more apartments for sale.
Many experts say that it will likely be a few years before the city sees a noticeable uptick in the number of homes on the market.
Resales seem to be moving at a slower pace since people still want to see more signs of economic recovery before they decide to put their apartment on the market.
The luxury units (priced at $3 million and above) that will hit the market in the next 6 to 12 months will only affect the upper 10% of the population that can afford those kinds of products. There will still be a shortage of “regular” homes ($3 million and below).
The current inventory crunch has its roots in the recession and credit crisis, which halted many under-construction residential projects and scuttled plans for new ones.
At the same time, tight credit, job losses and reduced incomes have prevented many homeowners from putting their homes on the market, since they can’t afford to upgrade to bigger units.
As a result of these factors, inventory is at records lows: In mid-September, there were 4,342 Manhattan homes on the market, down 25.7 percent from 5,847 in the third quarter of 2012, according to data from Miller Samuel. By comparison, when inventory was at its height in the first quarter of 2009, 10,648 units were on the market.
Despite the demand for mid-priced units, Manhattan’s sky-high land costs have made it increasingly difficult for developers to justify building condos that aren’t super-expensive.
Once land hits a certain price point, it makes only financial sense to build with nicer finishes and higher-grade appliances.
In the meantime, the few available mid-priced units in the city are seeing a frenzy of demand.