The heat wave that characterized much of August seems to have broken and the cool weather of the fall is on the horizon. The cooling of the Real Estate market has continued and I’m frequently asked “What exactly is a buyer’s market?” and “What does that mean for me?” There is one simple answer and one much more complex. A Buyer’s market is one in which an increase in inventory and a decrease in demand, along with other market indicators, causes sellers to lower their prices to compete for buyers. Pretty basic supply and demand economics; however, the biggest mistake people make is generalizing the market. To really understand market conditions you must analyze each submarket, product type, and size.
With everyone talking about how prices are dropping, it’s important to keep a benchmark in perspective. Average prices are still up, over 60% higher than they were at the height of the market in 2006 when the average sales price was only $1.3M, the average sales price to close out Q2 was $2.1M making prices in Manhattan the most expensive in the nation. Although inventory is up and prices are declining across the board, there are still specific markets within the city that are still seeing prices and sales climbing higher.
While the market is ripe for grabbing a great deal on a two bedroom condo in the Financial District, where the prices last quarter were down 7% year-over-year, you’re still going to be paying a premium for the same product on the Upper West Side which saw a 6% increase. Similarly if you’re looking to sell a three bedroom co-op on the Upper East Side you’re going to see more downward pricing pressure than if you were trying to sell the same in Midtown East.
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