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The Manhattan NYC Real Estate Market Cycle

By Daniel Akerman, Manhattan Listing Specialist, Keller Williams Realty Landmark II.

Most Manhattan homeowners and potential sellers have some sense of the real estate market being cyclical – it goes through changes and ups and downs. But many homeowners and sellers may be surprised to find out that the Manhattan real estate market is actually highly seasonal, with prices and activity going through ups and downs on a fairly predictable, annual cycle. In this article we’ll look at how the Manhattan real estate market varies, and how it may or may not impact you as a homeowner and potential seller.

The Housing Cycle versus the Seasonal Cycle

Before talking about the Manhattan real estate market and its annual cycle, it’s important to distinguish it from the Housing Cycle. The real estate cycle, on the broad scale, goes through tidal changes over the course of several years. This cycle corresponds roughly to large economic movements impacting the entire economy, and is marked by five phases: 1) Bottom/Early Recovery; 2) Expansion; 3) Exuberance/Peak; 4) Contraction/Early Downturn; 5) Recession/Full Downturn.This is called the Housing Cycle. 

If you were to plot a graph of home prices nationwide over the course of 20 years or more, you would see peaks and valleys on that graph, with roughly 8-12 years between lows or highs. That 8-12 year period is one full cycle of the Housing Cycle. This is historically what happens in the real estate cycle – prices increase for a period of 5-7 years, until they reach a peak that the market can no longer sustain, and prices begin a drop towards a low point, before the market rebalances and starts to climb again, starting the cycle all over again.

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Most Local Real Estate Markets Are Seasonal

This is very different from the annual, or seasonal, cycle that we see every year in New York City and other cities. These local changes are not driven by broad economic forces impacting the entire country, but by local circumstances and conditions. Most markets experience a surge of activity in the Spring-Summer season, and a corresponding low in the winter months from the holiday season through February. This varies somewhat market by market, and can be more pronounced or less pronounced based on various factors – not the least of which is the seasonal weather. A market like Los Angeles or Miami that has fairly consistent, pleasant weather year-round will often experience less seasonality than a place like Chicago or New York City, where there are more marked seasons.

This is the primary reason we compare home prices or real estate activity “year on year.” By comparing Spring of one year to Spring of the previous year, you can eliminate seasonal differences and be sure you are comparing “like with like.” This is likely to provide a far more reliable comparison than comparing home sales in the peak Spring season to those that occurred in the Winter months when the seasonal market is so different.

The Annual Manhattan Real Estate Cycle

In Manhattan, we see a very clear pattern emerge for both prices and sales activity. The slowest period, with the least sales, typically stretches from December to early February. Sales will begin to pick up in March and reach a peak around May/June, before dipping slightly over the hottest summer months, then there will be a secondary peak in September/October, before things die down significantly over the holidays and throughout January and into February.

How Seasons Impact Prices of NYC Apartments

As one might expect, these seasonal swings have an impact on prices from season to season. In the winter months, prices will typically dip to their lows, then climb throughout the spring, peaking in late spring around June. Then, as activity drops during the summer months, prices will dip a touch before hitting their secondary peak in September/October, before descending throughout November and hitting their annual lows in the winter months. 

How much do the prices vary? Many people will be surprised to find out that the median sale price across NYC can vary as much as 8-10% between the annual low and the annual peak! To put that into perspective, that means that if the median price across Manhattan is, say, $950,000 in December, a 10% swing would bring the median sale price to $1,045,000 at the market peak. 

We use a service called UrbanDigs.com to track this type of information and you can see one of their graphs below. If you look at the graph, you’ll notice that the curve of activity generally follows the trends I’ve described above, with a peak in late spring, a secondary peak in early autumn, and price swings of as much as 8-10% across the seasons in some years.

This graphic shows closed sales in Manhattan by month going back to 2008. One can see that the number of closings peaks around May and September of every year, while January has comparatively few closings.

Does that mean YOUR property will be worth 10% more in May versus January? It doesn’t quite work that way. These are market-wide dynamics that take into account all the sales across the city, including various property types, new development, resale, and so forth. It gives an indication of how active the market is as a whole, but not necessarily what an individual property is worth, or the exact change in a given property’s value. For that, you have to get much more granular and specific and look at comparable sales of properties in the area. As experienced real estate agents studying the market daily, we’ve often seen instances where values for a particular property or property type were doing the opposite of what the overall market in NYC was doing! So being granular with the data is key.

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To truly understand the value of your property, and how seasonal shifts may or may not impact your specific property’s value, you really need the expertise of an experienced agent who is very attuned to the market and knows how to analyze the market, and can explain to you all the different factors that go into pricing a property. In NYC, we see hyper-specific segmentation of the market, determined by things like property type (condo vs co-op), price segment, bedroom count, neighborhood, amenities, the floor an apartment is on, exposures, and whether the property is a resale or new development. All of these factors combine to create sub-markets with their own dynamics and forces at play.

When Should You Sell a Manhattan Apartment?

The short answer is when you need to. For the most part, timing the market is a fool’s errand. If you need to sell and are motivated to do so, then hire the right agent and put the home on the market. Simple as that. It’s impossible to predict the future and know what will happen in a month or two, or six, so we typically recommend you don’t try to do so. 

The COVID-19 pandemic was a perfect example: people who were waiting out the holidays to list their apartment in the Spring of 2020 got caught flat-footed when the pandemic swept through the city and the country, shutting everything down. What is usually a peak season for real estate sales in Manhattan turned into a wasteland, with everything shut down and median prices dropping by up to 20-30% in some cases. Had those same sellers not waited, and sold in the winter months immediately preceding the shutdown despite the “lower prices”, they would have sold and walked away with much more money!

That being said, there are some instances where it might make sense to wait until “peak season.” If you are a homeowner or property owner who doesn’t need to sell right now, and you can afford to wait and take the chance that median prices and activity go up in the spring, then it might be worthwhile to bide your time and list at a time when there is {typically} more real estate activity and prices are {generally} higher.

Listings-To-Contracts Ratio Is More Important

Arguably of much greater importance to your sale than the Manhattan seasonality is the listings-to-contracts ratio of your particular property type and size at any given time. The listings to contract ratio measures supply and demand. It looks at how many properties of a given type and price are coming to the market versus how many are going into contract over a given time period. It’s important to measure this as specifically as possible. 1-bedroom co-ops will have a different supply and demand environment than 2- or 3-bedroom co-ops. Condos will have a different picture from co-ops. And new development will differ from resale. Price will be important as well. So, if I’m the owner of a 2-bedroom, 2-bathroom co-op in Murray Hill worth approximately $1.1 million, I want to be sure I’m looking at the listings to contract ratio for 2-bedroom, 2-bathroom co-ops in Murray Hill worth about the same amount.

If there are 15 listings coming online every month and only 8 selling, that tells us that supply is outpacing demand, and the market favors buyers – regardless of whether it’s “peak season” city-wide. On the other hand, if the same 15 listings are coming online every month but there are 18 contracts monthly, that tells us supply can’t keep up with demand, and it’s a seller’s market for that particular property type, in that particular price range, in that particular neighborhood, regardless of what is happening seasonally across the city.

This, again, is something we monitor on UrbanDigs. In most markets this data would be available to real estate agents via the Multiple Listing Service, but Manhattan is one of the few markets in the entire nation that is not party to a true Multiple Listing Service. As such, UrbanDigs provides the best source for this type of information. Below you can see a couple of examples of the Listings-To-Contract ratios for different property types in Manhattan, as measured by UrbanDigs.com

Listings-to-contract ratio for 2-bedroom resale condos between $2 million and $5 million in Manhattan over the last 3 years. Notice the spike in January, 2022, even though that is typically the “slow season.”

Listings-to-contract ratio for 1-bedroom co-ops between $600k and $1 million in Manhattan over the past 3 years. Notice that in January of 2022 this segment of the market was completely different than that of the condos above over the same period.

Expert Help Is Key – Hire The Right Agent

Real estate agents are independent contractors, and they all do business differently – even within the same brokerage or office. So, interviewing agents and hiring the right one is key. Experience matters, but even a really experienced real estate agent can lack the knowledge and expertise to give you the information you really need in order to effect a successful sale. When interviewing agents, it’s important to pay close attention to the kind of information they are providing you and the amount of information they are giving you. Are they showing you marketing fluff, or is it hard data? Marketing is important, but only if it’s backed up by knowledge and information! Can they demonstrate real knowledge of what the market is doing, or do they just seem to know what they are talking about by making claims? It can be very impressive when an agent is throwing out stats off the top of their head, making them seem like a total expert. But are they also sharing the information with you to confirm their expertise? If an agent is giving you a read on the market, ask to see the information or the data they used to formulate their opinion. In addition to marketing know-how, their sales record, and their overall personality, make sure to hire an agent that has demonstrated to you that they truly know the market like a local economist and can explain to you what the market is doing.

At Queens Home Team, we study the market constantly and consider ourselves “neighborhood economists.” We’re constantly studying the data to be able to give homeowners the valuable information they truly need in order to be able to sell for the most money, with the least hassle, in the least amount of time possible. Best of all, we show them that information, so that they can review it themselves and learn from it.

To speak to a neighborhood expert on our team, reach out to info@queenshometeam.com and set up a free in-home consultation, or you can call 646-751-7549 and ask to speak to one of our listing specialists.

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