Posted be Leonard Steinberg on April 16th, 2014
The Wall Street Journal reports this morning that the expected SPRING RUSH has not happened quite as planned throughout the US Housing market, although the Manhattan market has been rather strong, and one reason may be that asking prices have been escalating to the point where they are experiencing buyer resistance.
Any market is a direct product of supply and demand, and with supply very low until recently, the demand has far outstripped the supply causing mammoth price escalation throughout the USA over the past 24 months, especially on the very high end where construction of A-grade product had been dormant through the Great Recession. Last years sales were fueled by a large volume of ‘distressed bargain buys’……those are largely gone today. Real estate is very local, and much of the recent slowdown has been concentrated in markets through the West and Southwest that had been leading the recovery. The Northeast is actually faring very well.
At a recent event at a super-fancy Midtown high-rise, I heard broker chatter about how their buyers simply do not see the value of paying ultra-top-dollar when from the window of their potential purchase are 7 other construction sites that will deliver well over 700 units at a similar pricing level. With $45 billion+ of construction in planning or under construction in the New York area, has the time arrived for Sellers to factor in a new phase of this market?
There are certain prime locations and buildings that will not be as affected by growing supply, but clear evidence is on our doorstep that the theory of increased inventory applying pressure on excessive pricing aspirations is indeed true.