The current inventory crunch, the worst in recent memory, has become the defining feature of New York’s residential market. At the end of the first quarter, there were just 4,960 co-ops and condos in Manhattan for sale – a 34% decrease from 7,560 in the same period of last year according to appraisal firm Miller Samuel. Current inventory is around the levels of 2004, before the real estate boom gathered steam. Inventory peaked in 2009 and has been falling ever since.
This situation is the consequence of several factors: the slowdown in construction following the financial crisis and the fact that banks are still more likely to finance rental projects versus condos and demographics. The City is adding about 50,000 residents a year but the number of homes being added was 10,599 in 2012, compared with a recent high of 33,911 in 2008. Low crime rates, improved subways and more family-friendly amenities are among the factors fueling the city’s popularity.
Other factors restricting residential inventory today could include unemployment and still tight credit. Homeowners who are struggling financially or fear they can’t get a mortgage can’t upgrade to larger apartments; that means they are unlikely to put their own homes on the market. Between 2009 and 2013, Midtown West is the neighborhood that has seen the biggest drop in available apartments for sale today: 51% (from 521 units to 257). The second biggest drop, 48%, happened in Tribeca (from 447 units to 232). Chelsea, Central Harlem and Greenwich Village all saw the inventory decrease by about 40% since 2009.