After a tumultuous start to 2019 between restrictive rent regulations and steeper taxes, the bid-ask spread in Harlem over the first two quarters indicates some work ahead on the part of both buyers and sellers to reach successful deals in the latter half of the year.
Four-unit townhouses saw the biggest spike, with the bid-ask jumping from 9.9% in 2018 to 21.4% in the first half of 2019, followed by a spike from 3.5% to 14.1% for 2-unit properties. If rental laws remain unfavorable to landlords, sellers will need to meet buyers’ expectations on price to tighten the spread.
In a silver lining, 3-unit townhouses actually improved over the past year, closing from 7.7% to 6.9%. This tight spread suggests an optimistic future for multi-family townhouses, despite restrictive rental laws, if expectations are realistic.
The single-family townhouse spread has remained generally favorable, increasing just 2.5 points over the past year from 8.9% to 11.4%. Although the new mansion tax, which kicked in on July 1, may cause this spread to widen slightly in the next quarter, we expect that effect to be temporary. Flexibility on the part of sellers and buyers will help, and it’s something we’re already starting to see.
Although transaction volume slowed by 35.5% between 2018 and 2019, more than 36% of transactions this year sold at the sellers’ asking price, indicating a willingness among buyers to move quickly when the price is right. Meanwhile, the average home price has dropped from $2.8 million to $2.3 million, suggesting a willingness among buyers to move toward price equilibrium.
Price equilibrium will certainly contribute to a tighter bid-ask in the latter half of 2019, and we’ll probably see a boost in sales volume.
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