August 4, 2016. We’re past the year’s halfway mark and well into the 3rd quarter of a year in transition. For most of 2016, buyers gained the negotiating edge, but while prices are holding, transaction volume and velocity are down. Interest rates have hovered at historic lows for the better part of 8 years, and as of this writing, we’re at an all time average low of 3.44% on a 30-year fixed product. Rates are expected to inch up nominally in December after the US presidential election, though the change, at least initially, is unlikely to make much of a difference in residential real estate.
If 2005 was the year of the bubble that wasn’t, how will this sixth year of the second millennium play out for buyers, sellers and brokers?
Last year, boom and bust stories about the real estate market dominated the press with dramatic headlines. For the most part, however, the reports were conflicting, and the media spin on medians and averages proved to be confusing ultimately for readers. There were contradictory interpretations of statistics as data was misread and facts were distorted—particularly in the year’s last quarter which saw a decided drop in the volume of sales, though not in the price of transactions.
What’s ahead for Manhattan real estate? To answer, a review of the year to date will help. The cold wait-and-see mindset that pervaded January and February was replaced in March and April with a cautious optimism; though spring was late, war seemed to have ended quickly, and the economy seemed to be recovering; buyer confidence had returned, and a good deal of pent up buying energy was released. Then in May and June, the market really swelled as enthusiastic buyers snapped up most of the apartments that had been lingering on the market. While some listings were getting ready to celebrate their one-year anniversaries, there were no distress sales, and, in fact, prices remained high. A mostly rainy summer was characterized by a shortage of inventory. All the while, from spring through summer, the power of mint held, as contracts for properties in move-in condition were getting signed within weeks, some in multiple bid situations.
