Residential market report

From Manhattan’s home sale doldrums to a rise in unconventional lending, a look at the biggest trends

Feb.February 01, 2019 09:00 AM

Townhouses spent an average of 187 days on the market in the second half of 2018. (Credit: iStock)

NYC’s resi sales slump continues

Residential sales in Manhattan dropped 3.3 percent in the fourth quarter of 2018, their fifth straight quarter of decline, according to a Douglas Elliman report. Green shoots, however, could be buried in the rubble. One potential sign of improvement is the rate of decline dropped in each successive quarter. “The market seems to be resetting to something more sustainable,” said Jonathan Miller, CEO of appraisal firm Miller Samuel. The outer boroughs haven’t been immune to the slowdown. A Real Estate Board of New York analysis found that total residential sales consideration fell in three of the five boroughs year-over-year, with only Staten Island and the Bronx seeing gains. Sales fell in both Brooklyn and Queens in the fourth quarter, but record-level prices did not. In Brooklyn, sales dipped 5.8 percent, while the median price inched up 1.9 percent, to $785,000. Elliman noted that in Queens, the median sales price rose 1.6 percent, to $568,000, as the borough’s average luxury sales price set a record at $797,330. “Queens is still benefiting from the Brooklyn spillover,” Miller said.

Alternative home loans are on the rise

Unconventional mortgages aimed at borrowers who cannot provide standard proof of income are making a comeback. Lenders issued $34 million of such loans in the first three-quarters of 2018, a 24 percent increase from the same period a year prior, according to industry research group Inside Mortgage Finance. The uptick came despite higher home prices and interest rates and a decline of traditional loans, part of a trend toward more non-bank lending, which offers greater flexibility than traditional lending. Jacqueline Frank, vice president of mortgage lending at Guaranteed Rate, said that lenders aren’t luring in borrowers who have bad credit. In 2018, first-time foreclosures decreased every quarter, according to Property Shark, with the fourth quarter seeing a 14 percent year-over-year decrease. Lenders are tapping into borrowers who were underserved after lending tightened following the financial crisis a decade ago, said Frank, citing one client who needed $300,000 but faced issues due to being self-employed. “There is a lot of money out there, and there’s lots of money in lending it,” she said. “The loosening is on the income side.”

Deep discounts don’t help townhouse deals

Townhouses are spending a longer time on the market — discounts be damned. The properties spent an average of 187 days on the market in the second half of 2018, the longest period since 2010, according to a townhouse report from Stribling & Associates. Upper West Side townhouses spent the longest time on the market, averaging 347 days, despite the neighborhood also having the biggest discounts, with an average of 23 percent. The smallest price cuts, at 7 percent, were in Northwest Brooklyn. Overall, the number of sales decreased 13 percent year-over-year, to 223, while the median price climbed 6 percent, to $3.45 million, according to Stribling. Discounts aside, steep price tags still exist. Two adjacent townhouses in Harlem were listed for $27 million in January, five times more than the neighborhood’s previous record, a $5.1 million property that traded last year. And an Upper East Side mansion that hit the market four years ago seeking $77 million was recently relisted at a reduced price of $67 million.

LIC rides the Amazon H2Q wave

Amazon’s coming to Long Island City has put a jolt in the local residential real estate market. In the fourth quarter of 2018, condos in contract increased by 27 percent year-over-year, according to a Modern Spaces report, which noted that the period ended with about 65 percent of units in contract, compared to 38 percent in the third quarter (see related story on page 56). Modern Spaces attributed the surge in activity to Amazon’s early November unveiling of its two new corporate campuses — one in LIC and one in Virginia. “The market reacted by recognizing a buying opportunity,” the report said. Of closed sales, 46 percent were one-bedrooms units with an average price of $825,135. Studios spent the longest time on the market, averaging 188 days. MNS Real Estate found the average rental price in Long Island City last year was $3,208, with the strongest rent growth in Court Square and Hunters Point. But it remains hard to predict market trends going forward, thanks again to Amazon. “The immediate effect can be seen through the increase of active buyers,” Modern Spaces said. “However, it is too early to draw conclusions to the effect on prices in the market.”


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