We’ve only made it through the first quarter of 2013, but Manhattan is already setting some real estate records. “Inventory—year over year—fell at the fastest rate since I began tracking it more than 12 years ago,” says real estate appraiser Jonathan Miller, who prepares Elliman’s market reports. Inventory fell 34.4% since the first quarter of 2012; meanwhile, we’re seeing the the largest price increases in over five years—if you don’t count the stretches in 2010 when demand heightened because homeowners were incentivized by a a federal tax increase. The median sales price in Q1 was $850,555, a jump of 5.9% from this time last year.
Why? Inventory is low because credit is still tight, Miller explains, meaning that sellers are reluctant to list their own apartments out of fear that they won’t qualify for a down payment and be able to buy. Other sellers, however, might have a blemish-free credit record, but because the available listings are so so sparse, they’d rather not buy than settle or give up their current pad. As a result, prices edged upwards, with that change driven by a lack of supply rather than an increase in demand. Buyers these days do have it rough—but not as rough as they’ve had it in recent years “There isn’t a panic by buyers yet, like we had in the boom,” Miller cautions. “It’s more about frustration. There are more bidding wars, but only at about one-third of the rate we saw during the boom.”
Corcoran’s number-crunching also found shrinking inventories in Manhattan, which marked the eighth consecutive quarter of year-over-year declines. It won’t get any easier for buyers if available apartments keep getting snapped up quickly. The average time an apartment spent on the market until a contract was signed dropped 14% compared with a year ago, according to the quarterly report from Brown Harris Stevens.
Hand-in-hand with the rising prices came an increase in contract activity from both the last quarter and Q1 of 2012, Streeteasy’s quarterly report shows. The assessment concludes: “2013 will be the Year of the Frustrated Buyer unless inventory levels increase to meet rising demand.”