The rate of price growth is beginning to slow down and properties are taking longer to sell, according to an article in Luxury Daily.com.
Price growth in the boroughs of Brooklyn and in Manhattan has been slowing since July 2015 and December 2012 respectively. The number of days a property has to spend on the market has also been reaching highs just recently. With the US dollar currently performing strongly against other currencies, it is becoming less likely for foreigners to purchase real estate as an investment, reducing demand. However, experts feel that slower price growth and a longer listing time doesn’t necessarily signal a price drop, but could mean that the market is returning to a more stable period of growth similar to that seen in 2013.
When it comes to the luxury end of the market, prices are beginning to decline in Manhattan. From 2014 onwards there was a large increase in the number of luxury homes coming onto the market with developers meeting the growing demand. Now with demand beginning to slow down, there has been a considerable increase in the number of days these luxury homes need to spend on the market, reflecting oversupply in this sector. As a result prices of high-end homes in Manhattan have been steadily declining since May 2015. Even though prices may be increasing at a lower rate, the overall growth is still substantial. In Manhattan, year-on-year prices were up by 5.3% in January, while in Brooklyn prices rose by 8.5%.
Condominium sales have slowed considerably and luxury properties that went into contract in January had spent a median of 131 days on the market which is 33 days more than last year. In Brooklyn the median time spent on the market increased by 18 days. The median price of luxury real estate in New York has also fallen. In May it peaked at $3.27 million but had dropped by 0.3% to $3.26 million by the end of 2015. In spite of this, prices are still predicted to increase by 4.1% by next year, but this does mean an end to the rapid growth seen it between 2013 and 2014. Now it is expected that the real estate market in the city will become more stable, showing steady growth rather than rapid increases.
Notably, the East Brooklyn submarket which is relatively inexpensive has seen much of the overall growth in the borough, growing by more than 25% compared to last year. More expensive parts of the borough have been extensively impacted by the overall slowdown in the city with prices growing at half the rate of the overall borough.
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