Manhattan is becoming a buyer's market as home prices fall and inventory rises within the second quarter of 2024, latest reports show.
The average sales price for Manhattan homes fell 3% to only over $2 million, in accordance with a report from Douglas Elliman and Miller Samuel. The median price fell 2% to $1.2 million, and luxury apartment prices fell for the primary time in over a 12 months, in accordance with the report.
The drop in prices is a results of the increasing supply of apartments on the market, that are also taking longer to sell. According to Jonathan Miller, CEO of appraisal and research firm Miller Samuel, there are currently greater than 8,000 apartments on the market in Manhattan, which is greater than the 10-year average of about 7,000.
Manhattan currently has a 9.8-month supply of apartments on the market, which Brown Harris Stevens says means it will take 9.8 months to sell all of the apartments available on the market without latest listings coming in. “Any number above 6 months tells us there is too much supply and we are in a buyer's market,” the Brown Harris Stevens report states.
The falling prices and rising variety of unsold apartments in Manhattan contrast with the national real estate landscape, where persistently tight supply continues to maintain prices high. Brokers and real estate analysts say high prices in Manhattan have grow to be unsustainable post-Covid, and each buyers and sellers are eventually capitulating to the next rate of interest environment.
“Buyers and sellers are losing their resolve,” Miller said. “At a certain point, they can't wait much longer before they feel like they have to take action.”
As the gap between buyers' and sellers' expectations narrows, more deals are being closed. According to the Douglas Elliman and Miller Samuel report, there have been 2,609 sales within the second quarter, up 12% from the previous 12 months. This was the primary rebound in sales in two years.
“At the start of the second quarter, the New York real estate market awoke from the doldrums where it was languishing in the primary quarter of 2024. Deals began to seem in all price categories,” said Frederick Warburg Peters, president emeritus of Coldwell Banker Warburg.
High rents in Manhattan also continue to encourage sales. The average rental price for an apartment was still above $5,100 per month in May, and rents tend to rise in late summer. Many potential buyers who had been waiting out the rent-to-own market are now finally deciding to buy, hoping that interest rates will start to fall in late 2024 or early 2025.
“If people were undecided, high rents may have pushed them to enter the purchase market,” Miller said.
However, mortgage rates have less of an impact on the Manhattan real estate market than in the rest of the country because most sales in Manhattan are made with cash. In the second quarter, 62% of transactions were made with cash.
While prices fell across all segments of the Manhattan real estate market, the high-end segment is among the weakest as the wealthy wait to buy until after election uncertainty. Median sales prices in the luxury segment — or the top 10% of the market — fell 11% in the second quarter, according to Miller Samuel. Luxury housing supply rose 22%.
“At the highest end, this weakness may very well be the beginning of a trend or simply a one-off event,” Miller said. “We'll must wait and see what happens within the second half.”
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