Starting next week, the major brokerage firms in New York City will begin reporting sales data for the second quarter of 2019. Last quarter, we predicted that the downturn in the Manhattan condominium market was coming to a bottom and that investor sentiment was starting to turn.We think the 2nd quarter numbers will support this thesis. We also believe that a number of major macro forces will have an impact moving forward, including:

  • The 10-Year Treasury rates declining to approximately 2%
  • The City announcing changes to the Mansion Tax rule
  • The State Assembly announcing new rent regulation laws

Based upon our data and analysis, we predict the following announcements for the Q2 2019 condominium market:

(1) Douglas Elliman Q1 2019 Sales Report & Douglas Elliman Q2 2018 Sales Report

Sales Price: As often occurs, we are predicting a discrepancy between average and median with respect to sales price. A large portion of the estimated decline in average sales price can be associated with the $238 million sale at 220 Central Park West in Q1. Without that transaction, average sale price would be just about flat. The big news here is the estimated increase in Median Sales Price, which we predict will rebound back to 2017 levels due to a large increase in the percentage of closings of new developments. These sales need to be taken with a grain of salt considering some were agreed to two or three years ago.

Number of Sales: We are predicting a monster number here and one that the media will concentrate on. Q1 was an extremely weak number so the bar was low, but a 50% QOQ increase is certainly newsworthy. Does this mean that market sentiment has shifted and that buyers are sick of waiting for sellers to capitulate, or, again, is this more of a function of new development closings?

Listing Discount: This is an important number for us at Compound, and the one we are most focused on each quarter. As we previously discussed, certain sellers are willing to transact at prices well below ask. Though slightly down from Q1, a 7.0% average discount would still be relatively high on a historical basis and is representative of a buyers’ market.

Of course, let’s end with a sports prediction since we were spot-on with our NCAA tournament prediction in Q1. Let’s go with USA beating Netherlands in the final, 3-1.