High demand, stable or moderately rising prices and plummeting inventory have characterized the Manhattan real estate market for Q4 2012. Inventory dropped by 37% to a 12-year low. The lack of additional new development inventory combined with high demand for Manhattan condos, has led to a dearth of properties available for sale, especially in new developments. Basic economics suggests that these factors will lead to price appreciation in the near term. The trend of low inventory, however, is expected to continue for some time.
As for the Luxury Market, we have seen a significant increase in activity in Q4 2012 as sellers moved to close deals before the rise in capital gains tax that went into affect on January 1st, 2013. Ultimately, I am sure everyone is happy that the capital gains rate only increased from 15% to 20%. We expect to see a decline in activity for Q1 2013 as activity as a result of this frontloading.
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