In May 2019, we reached peak inventory on the Upper West Side townhouse market with approximately 94 townhouses available for sale. Eight months later, there are now 51 townhouses on the market. What happened to cause this drop in inventory?
Since May 2019, there have been 19 sales, 12 properties are now in contract, and 17 new properties have come to market. There have also been a larger-than-usual number of townhouse rentals in lieu of sales. All of the above have contributed to the significant reduction in inventory over the last nine months. In addition, many properties have been taken off the market, as sellers who did not need to sell chose a wait and see approach to determine if the market would deliver prices that would meet their expectations.
For properties that have remained for sale, many sellers have reduced prices to adjust to the changing market, and as a result, buyers are more active. Buyers also simply have fewer choices than they did last year, particularly among finished single-family homes, leading to more equilibrium in the market as the economic fundamentals of supply and demand have begun to take hold. It remains to be seen whether the drop in available single-family inventory will lead buyers to become more active in renovating dated single family homes or converting multi-family townhouses into single-families, an outcome which would certainly contribute to a further reduction in inventory and boost the prices of multi-family homes unencumbered by rent regulated tenants.
There is a strong case to be made that the drop in inventory indicates that the bottom of the market has been reached, and therefore 2020 should see an increase in volume over 2019.