The Dirt: Where’s The Spring Market?
The question on everyone’s mind—what is going on in the real estate market? The spring market has been fickle no doubt, with the answer changing week to week. The first quarter started with a flurry of showings in January and February but ended with a slowdown in the number of residential sales. We attribute the fickleness to several converging factors:
- Weather. Bad weather, power outages: how many Nor’easters did we have in March? The extreme weather impacted both showings and supply coming to the market.
- Stock Market. The volatility in the equity markets has dampened consumer confidence and conviction.
- New York City Real Estate. Whether we like it or not, the health of NYC’s real estate market has an impact on all ancillary markets such as Greenwich. For the first time in two years, the average transaction price fell below $ 2 million in Manhattan in the fourth quarter as the impact of the new tax law is digested (see article here ). Manhattan is also feeling the glut of new supply coming on line at the high end.
- New Tax Laws. As we discussed in our 4Q2017 Snapshot, the new tax law (SALT) which limits annual real estate property tax deductions to $10,000 caused some buyers pause. However, as we mentioned, the new law could also result in buyers keying into the benefits of Greenwich’s lower property tax levels compared to surrounding New York and New Jersey markets
For the complete 1Q2018 Snapshot, please click here..
So what does this all mean and where does the market stand? Well, it depends.
- Buyers are picky and patient, and do I dare say pickier and more patient than in years past…..and that’s okay for now, we’re still in the early innings. One of the greatest changes in the industry over the past ten years is that Buyers are incredibly informed thanks to Zillow, Realtor.com and Trulia. In fact, Buyers tend to be more informed on the market than Sellers because they are culling through the data on a daily basis.
- Sellers may still be a bit optimistic on pricing. As we detailed in our Centric Snapshot 4Q2017, we analyzed over 700 properties that sold in 2017. It showed that the average discount from Original Price/Sold Price was approximately 12% and List Price/Sold Price was 7%—suggesting that Buyers hesitate to bid unless the listing price is within that target zone. At that point, agents have reported receiving multiple offers.
There are Buyers with money in hand ready to pull the trigger, but the supply is not quite up to par.
For the complete 1Q2018 Snapshot, please click here.