It’s no news that New York City’s luxury real estate wasn’t skyrocketing in 2018. In fact, 2018 was not all that kind to any sector of the residential market; condo sales plummeted and home transaction values were sliding, registering a steady decline in prices not seen since 2009.
But the slowdown was a normal turn for the market, industry experts say. After years of unparalleled growth, the market is “normalizing” or, as REBNY president John Banks said, it’s going into “a natural cooling off interval after a very hot stretch.”
To put things into context, New York brokerage PropertyClub looked at the past 15 years of sales in the $1 million+ category, to signal out trends in terms of both closed transaction and sales volume, and give us a comprehensive view of how the market performed compared to the years that came before it:
Looking at the sales trend for the past 15 years confirms what REBNY president John Banks was saying; New York City’s real estate market saw a meteoric rise in the past years — with prices and sales of properties seeming unstoppable after the 2008 financial crisis.
A closer look at the market’s performance shows that, in the early 2000s, $1 million+ property sales were fairly rare, with only 1,753 sales being recorded in 2003 across New York City. By 2017 that number rose to 6,881.
In terms of sales volume, while early 2000s saw less than $3.7 billion generated by transactions in the $1 million+ segment, 2017 shattered all previous records with slightly over $20 billion in transactions.
But 2018 stepped in to break the pattern of uninterrupted growth, and ushered in the first slowdown in luxury sales since the 2008 financial crisis. Overall sales volumes for this segment dropped by approximately 12.5% to $17.8 billion.
What does this mean for New York City’s luxury home market?
That it’s time to take a breath.
According to Jonathan J. Miller, who runs the Miller Samuel appraisal firm in Manhattan, “The past year was more of a ‘normalization of the market’, after record activity in recent years.”
In a year-end report by the New York Times, referencing home sales across the city, Mr. Miller said that, comparatively speaking, “sales are not low — they are just not unusually high. It’s like we came off the autobahn: It feels very slow relative to the last three to four years, but historically it’s not.”
Pamela Liebman, chief executive of the Corcoran Group, shared the sentiment: “Since 2009, the market has gone on a very aggressive ride, and I think it’s normal that we see a bit of a slowdown.”
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