Manhattan Real Estate Market and Shadow Inventory

Manhattan real estate is full of change and contradiction.

There is the good news: 4Q reports show an increase in activity. Sales are up 8% from 4Q of 2008 and up 11% from 3Q of 2009.

And then there is the not-so-good news: The majority of those sales are resales from the credit crisis. Just 19% of the 4Q sales were new condos, down from 38% in 4Q of 2008. Going further back, 58% of 2006 sales were new. And then there is the more than 6,000 unreleased units of shadow inventory.

With over 7,000 units currently on the market and the shadow 6,000, the high-end development sector of the market faces as many questions as challenges.

Photo Credit: i’mjustsayin

Midtown is full of units on the market and few buyers

Shadow Inventory

While much of the market is recovering, the multi-million dollar condo market, both released and unreleased, isn’t feeling any healthier. New and almost-new condos are piling up in the market. And because the shadow inventory of unreleased condos have been waiting for over a year, they face a market where prices have come down and buyers have left the building. Many short-term investors who bought high-end condos while the market was booming and planned to re-sell or rent them won’t be biting when the shadow inventory is released. Then there were the brokers who bought on early insider prices with plans to flip their units. Can you say conflict of interest?

Midtown has been hit especially hard, as many units were intended for international buyers and investors who were buying based on location rather than a place to live. Now there are few buyers and too many units for sale, and many international buyers are looking for townhouses or co-ops instead of high-end developments.

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