This article in Wednesday's Bloomberg business news by Oshait Carmiel suggests the Manhattan market has shifted –- to one with more options for buyers since more inventory has come on the market -- and there is therefore less pressure to accept the ambitious pricing of the past few years. Not that prices are falling, but that they are rising less quickly than in the past few years, when almost every listing, it seemed, was being sold immediately with competitive bidding for more than the asking price.
Among the causes for that frenzy of the last few years were: (a) pent-up demand coming out of the Great Recession, combined with (b) historically low interest rates, and (c) very low levels of new inventory caused by the development hiatus during and immediately following the Great Recession, as well as (d) low levels of re-sale inventory, because many sellers hold-off selling when prices seem to be rising rapidly year after year.
Now, all those stalled development projects are in the market, as well as those that got fast tracked as the market boomed, and, at the same time, as price increases are slowing, many sellers think it's finally time to cash-out, adding to the increased supply.
As is common in all market shifts, it takes sellers a year or two to accept the new reality. Many sellers are coming in with very ambitious pricing, and sometimes their properties are sitting on the market before eventually selling for significantly negotiated prices.
Again, this shift is not one to a buyer's market, but to a more balanced one. Prices in Brooklyn are still increasing aggressively, from other articles I've seen, as are prices for certain segments of the Manhattan market. And about 17% of Manhattan sales are still selling for above asking price (compared with about 32% a year ago).
But it means sellers now need to develop pricing strategies with very careful thought, research and knowledge to achieve maximum price, since overpriced properties historically sell for less than they would have if priced appropriately initially. And it means serious buyers, with real interest in a property (as opposed to tire-kickers who are just looking to see how far they can beat down a seller) can actually negotiate based on a careful assessment of what the market and value of a property is, rather than based on the anticipation of extreme appreciation as in recent years.
Experience and access to extensive pricing data is extremely helpful and valuable with either task. If I can provide any information to you or someone you know, please don't hesitate to contact me.
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