The Real Deal New York

Residential market report

From the year’s hottest neighborhoods to Manhattan’s housing quandary, a look at the biggest trends
By Chava Gourarie | January 01, 2019 10:00AM

The Garment District’s median sales price jumped 41 percent during 2018, to $2.3 million. (Credit: iStock)

Home sales slump across NYC as tax law kicks in

Manhattan and Brooklyn saw home sales decrease each quarter for the last year amid a region-wide sales dip, according to data cited by Bloomberg. An analysis by The Real Deal found that residential sales volume fell by 11.3 percent year over year in Manhattan during the third quarter, while the median sales price slid 4.5 percent, to $1.1 million. The factors leading to the downturn are a combination of rising interest rates, a surplus of high-end apartments from the development boom and the 2017 federal tax law, which capped a key tax incentive. In November, the average price of single-family homes, condos, co-ops and townhouses for sale in Manhattan was $1.1 million, a 3.3 percent year-over-year decline that a StreetEasy report noted was the sharpest drop since February 2009. The luxury market is not faring any better. According to StreetEasy, 84 percent of luxury sales sold at a discount in the first three quarters of 2018, up from 65 percent in 2015. Kobi Lahav, a senior managing director at residential brokerage Mdrn. Residential, said he is advising clients not to sell if they don’t have to.

Über-luxury is doing just fine

Manhattan’s housing market maybe hurting, and the higher you go, the worse it gets — until, that is, you reach the summit: the billionaires’ market. The pinnacle of New York’s residential sector is not only in demand, but holding its own with five other cities that cater to the world’s elite. In the first eight months of 2018, there were 39 sales above $25 million in Manhattan, averaging $38 million per transaction, according to a Knight Frank report. Those sales totaled $1.5 billion, putting New York’s luxury market slightly ahead of 2017, when Knight Frank documented 42 transactions in the ultraluxury market, averaging some $39 million. More than a third of the city’s top-tier transactions in 2018 were Downtown, followed by a third in Midtown and 22 percent on the Upper East Side. New York trailed only Hong Kong in terms of transactions and total dollar volume — the Asian financial hub had 47 deals, worth $2.1 billion — and it tied London in both metrics. Along with Los Angeles, Singapore and Sydney, the six cities analyzed by Knight Frank had 116 total transactions worth a combined $5.1 billion.

Concessions are still rising everywhere

Rents were down in Manhattan in November and up in Brooklyn and Queens, but concessions continued to rise across the city, according to a Douglas Elliman report indicating the rental market is softer than rental prices might suggest. In Manhattan, where median rents were down 1.3 percent year over year, the percentage of rentals that came with a concession increased for the 42nd month in a row. In other words, perks have been propping up rental prices for three and a half years. “The use of concessions is keeping vacancy in control, so the buildings are full,” said Jonathan Miller, CEO of appraisal firm Miller Samuel and author of the Elliman reports. Miller noted that vacancies in Manhattan are at their lowest levels since the recession. In Northwest Queens, the median rent rose 10.3 percent, spurred by a large number of pricier new development units. New development rentals made up 46 percent of the leases, and 80 percent of those deals received a concession, according to Miller.

Garment District rockets into third place

It’s that time of year for a neighbor hood reckoning. Who won, who lost, and who are the breakout stars? The Garment District was one clear winner. The median sales price jumped 41 percent during 2018, to $2.3 million, surprisingly launching the neighborhood into third place among the city’s priciest places after Tribeca and Soho, according to a ranking by PropertyShark. Tribeca once again took the top spot despite an 18 percent median sales price chop, to $3.9 million, while Soho’s median price of almost $3 million remained unchanged. The most expensive neighborhoods in Brooklyn were Dumbo and Boerum Hill at $1.8 million and $1.6 million, respectively. After the Garment District, neighborhoods that experienced more than 25 percent growth last year were the West Village and Lower East Side in Manhattan and Greenpoint and Prospect Heights in Brooklyn. A StreetEasy ranking of 2019’s up-and-coming neighborhoods, which examined a variety of factors like new development and rental and home price growth, put Downtown Brooklyn in the No.1 spot, followed by East Flatbush and then the Lower East Side, the only Manhattan neighborhood to make StreetEasy’s watch list.