Over the past few years, the combination of low rates and tight inventory has helped bid housing prices up nationally. That situation is easing as more and more inventory hits the market. As Bloomberg News reported yesterday, it looks like the days of bidding wars are waning as the supply of homes for sale rises.
Unless you are shopping for a co-op or condo in Manhattan (or parts of Brooklyn). As the accompanying chart shows, housing inventory listed for sale in New York are at the lowest levels we have seen since, well, last year. It's the tightest supply of housing stock since 2000.
Jonathan Miller, president of Miller Samuel Inc., said, "the lack of supply is what is driving the housing market, not fundamentals. The dearth of inventory is especially exaggerated in Manhattan." Miller noted that the top of the market is where new development is entering housing stock. The limited new supply in the low-priced markets is a function of Manhattan land prices.
Entry-level homes in Manhattan are studios and one bedrooms, and price under $750,000. While this is not exactly entry level in the rest of the country, Manhattan real estate is unique. It is largely homogenized, with less and less low-income housing. Nearly all of Manhattan has gentrified, and this trend is spreading: hence Brooklyn's rapid price growth. Miller noted that "Queens is the new Brooklyn," as people seeking affordability are priced out of Brooklyn.
If sales tail off, we could see an uptick in inventory in 2014. But for now, Manhattan real estate is tight, and prices are elevated. If you want better values, you have to shop elsewhere.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
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Barry L Ritholtz at email@example.com