It’s getting real spooky in the New York City housing market this quarter.
The real-estate sector is still adjusting to rising mortgage rates, recession fears, and a strong job market.
But “the prevailing mood in New York City is one of disquiet,” a new report from Coldwell Banker Warburg. The report is the company’s third-quarter update of how it sees the New York City property market.
“The city has entered what I like to call a ‘tornado market’,” Frederick Warburg Peters, president of Coldwell Banker Warburg, and author of the report, added.
“A tornado is completely unpredictable — no one knows what path it will take. And it can raze one house to the ground while leaving the neighboring house intact,” Peters explained to MarketWatch.
“‘A tornado is completely unpredictable — no one knows what path it will take. And it can raze one house to the ground while leaving the neighboring house intact.’”
— Frederick Warburg Peters, president of Coldwell Banker Warburg
Hence, the term “tornado market” refers to one in which “it’s hard to determine why one property sells in three days with three offers, and a similar one a block away can remain on the market for three months without a bid,” he added.
“While much of this may be attributable to condition,” Peters explained in the report, such as supply chain issues, or the fact that many co-op boards make buyers wary of apartments that need renovation, “there remains a quality of randomness to what sells and what doesn’t,” he added.
Don’t be mistaken, though. Sales haven’t exactly plummeted in the Big Apple: Smaller and mid-sized properties saw brisk sales in the third quarter, the company said, compared to larger units.
Through the summer, Brooklyn and Queens also saw a strong pace of condo sales.
But the $10 million and above condo market was “considerably quieter,” Peters added, as well as pricey townhomes and large pre-war co-op apartments along Park and Fifth Avenues and Central Park West.
“The $10 million and above condo market was ‘considerably quieter,’ as well as pricey townhomes and large pre-war co-op apartments along Park and Fifth Avenues and Central Park West.”
Co-op apartments, or co-operative apartments are a big-city phenomenon, where one shares ownership of a building jointly with other occupants. In other words, you’re not buying the property when you purchase a co-op, you’re buying shares in a nonprofit corporation that allows you to live there.
Unlike co-ops, condos appeal more to buyers, due to the “simpler ownership experience,” Peters said. From being able to have access to amenities like meeting rooms and professional level fitness centers, the newer luxury buildings offer a move-in ready home.
Comparatively, older units were less attractive, as it required buyers to embark on extensive renovations. That’s also compounded by supply-chain shortages, and “the vagaries of co-op boards which must approve renovations,” Peters said, which scares away prospective buyers.
Location-wise, sales of units on the Upper West Side was slightly more briskly than the Upper East Side, Peters said.
Everything in the Village sold if priced right, he added, “including properties in the East Village where no one who had a choice would have considered living forty years ago.”
But inventory is still tight in New York, even if the market has cooled slightly.
Got thoughts on the housing market? Write to MarketWatch reporter Aarthi Swaminathan at email@example.com