You would have received this Newsletter on the 9th November, I wanted to update and advise that following the surprise election result of Donald J Trump being elected as the 45th President of the United States, I have found there to be no change since my research below:

I have found that developers are now offering free rent and paid attorneys’ fees as prices have fallen in the New York City real estate market. While it sounds like a flashback to the dark days of 2009, it’s actually happening today for different reasons in various sections of New York City’s residential markets.

Over the last year (2015-2016), the real estate market has been characterized by prices that appeared to be on a never-ending upward spiral. Now the tables have begun to turn. In many cases, it’s the buyers and renters who have the advantage. While a year ago, I was being told, “If you want to see my property, you’ll need an appointment” – now, I’m receiving invitations from developers to view their properties.

Facts

• There is a surge in supply.
  – Inventory is beginning to mount up in at least in two key segments:
  – New development condos in Manhattan; and
• Rentals and Downtown Brooklyn properties are flooding the market.
• In Manhattan, new development inventory surged 27% to a total 973 units on the market in the third quarter of 2016, year-over-year after four quarters of decline.
• There could be five years of excess condo inventory sitting on the market by the end of 2017, according to an analysis released earlier this year by a NYC appraisal firm. That oversupply could spell trouble for the developers who are looking to sell condos quickly as concerns mount about softening in the market.
• Consequently, buyers have more options to choose from, and more time to decide what to buy.
• Developers miscalculated by hoarding ‘shadow inventory’ in early 2015, as the pace of sales began to slow (‘shadow inventory’ describes properties that are either in foreclosure and not yet sold, or that owners are holding off putting on the market until the market improves). By September 2015, there was approx. 67% year-on-year increase in Manhattan’s shadow inventory, bringing the number of shadow units up to over 3,500 units. By comparison, more than 6,000 actual Manhattan units were listed.
• The shadow inventory trend is now reversing as developers have no choice but to list some of that inventory on the market. Although keeping some units off the market can help make supply seem scarce and thus more desirable, those sponsors eventually need to start listing the units.
• The rental market is also oversupplied. In both Manhattan and Brooklyn, rental inventory ballooned by more than 30% in September 2016, and grew some 17% in Queens. The situation is expected to intensify in the coming months.
• There will be pressure in the market as a result of the oversupply of available units. It will take longer for units to exchange hands. The most marked consequence at present is in the incentives being offered to convince buyers.

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