Fewer than 50% of the homes listed in the NYC real estate market in Spring 2018 didn’t find a buyer. What can home buyers and sellers learn from this?
Last year, home inventory throughout the city reached record highs. More than 12,000 New York City homes were listed for resale on StreetEasy, an online marketplace for NYC real estate, during the peak listing period of March to May.
Even though September 2018 data shows record high stock market levels and the lowest unemployment rate ever in the city, still, fewer than 50% of these listed homes were bought as of early 2019. And most of those were sold at much lower than their asking price.
Now, in the first months of 2019, housing stock is still near all-time highs. Analyzing 2018 figures, there are five critical takeaways for NYC’s home buyers and sellers planning for the current year’s home-shopping period.
1. In spring 2018, fewer than half of all homes listed were sold
As of February 2019, only 48% of the homes listed from March to May of 2018 were sold.
The sluggish sales were not confined to the high-end market. Homes across all boroughs and price points were affected. Only 44% of Manhattan homes were sold. The figure is a little better in Queens, with 54% of homes sold.
Price does not seem to be the only issue here. 61% of all homes listed with a price tag of $1 million or more failed to sell. But 45% of all homes with less than a $1 million price tag were also unable to find buyers. And only 21% of homes listed at $5 million or higher found buyers.
2. Many spring home listings were taken off the market
The majority of sellers who couldn’t find buyers at their desired prices decided to pull out their listings from the market. 40% of all the StreetEasy listings created in spring 2018 were either delisted, paused, or no longer available.
Only 7.5% of all the peak months’ listings or 14% of the total unsold units continue to actively look for buyers. Listing agents reported 4.5% of listed homes as in-contract, with most entering deals in late 2018 and likely closing in the first months of 2019.
With a lot more homes remaining unsold, expect sellers to reenter the market to find a buyer. This signals that this year’s spring home-shopping season will likely see an increase in inventory.
3. Most 2018 home sales closed below asking price
An estimated 70% of homes listed last spring that were eventually sold closed below their initial asking price. That’s a considerable increase from previous years. In 2017, it was 61%, and in 2016, 62%.
In Manhattan, 77% of homes sold below their initial asking price, compared to 68% in Queens and 61% in Brooklyn.
The median variation between the recorded closing price, as indicated in public records, and the initial StreetEasy listing price was 5.5%. That’s a $44,000 price difference from the $800,000 median listing price for homes sold.
4. Strategically-priced homes found buyers
Still, a significant percentage of all home sales – 19% – closed above their asking price. Note that these homes were likely to be among the lowest-priced in their neighborhoods for their bedroom count.
Homes that eventually sold above asking price were first listed for a median of 8.8% below the 2018 median price for their neighborhood and bedroom count.
On the other hand, homes that sold below asking price have been listed a median of 1.2% above the median for their neighborhood and bedroom count. Unsold homes were listed for a median of 6.4% above their benchmark median.
5. Listings that were priced to sell drew favorable interest
Home listings that were priced to sell attracted a lot of buyer interest. Homes that sold above asking price were saved by StreetEasy users almost twice as much during the first seven days as those that sold below asking price, and nearly thrice as much as those that failed to sell.
Spring home listings that sold above asking price spent just four weeks on the market before entering into a contract, in contrast to nine weeks for those that sold below asking price.
Lessons for Home Buyers and Sellers in 2019
So what’s in store for buyers and sellers this year?
The forecast for 2019 is that it will be a repeat of 2018, with another considerable number of listings hitting the market. But this will also include homes that were unsold in 2018.
NYC housing inventory continues to be high, with weaker price growth in 2018 compared to past years. Sellers continue to face falling prices and increasing inventory this year.
While there’s no shortage of people willing to buy homes in NYC, there’s hardly anyone willing to pay more than what the market demands. Given this situation, sellers still looking for buyers should consider cutting prices. Meanwhile, buyers should make it a point to do thorough market research. Compare listing prices to neighborhood benchmarks and study the demand that different listings attract.
Here’s the advice for NYC’s home buyers and sellers planning for the current year’s home-shopping period: Be prepared to negotiate. It certainly pays to be patient, but first, you have to know the market well.