Manhattan is now a 'purchaser's market' as actual property costs fall and stock rises

Manhattan is changing into a purchaser’s market as residence costs fell and stock rose within the second quarter of 2024, based on new reviews.

The typical actual property gross sales value in Manhattan fell 3% to only greater than $2 million, based on a report from Douglas Elliman and Miller Samuel. The median value fell 2% to $1.2 million, and costs for luxurious flats fell for the primary time in additional than a yr, based on the report.

The value declines are a results of rising stock of flats on the market, that are additionally taking longer to promote. There are actually greater than 8,000 flats on the market in Manhattan, which is larger than the 10-year common of about 7,000, based on Jonathan Miller, CEO of Miller Samuel, the appraisal and analysis agency.

Manhattan now has a 9.8 month provide of flats on the market, which implies it could take 9.8 months to promote all the flats available on the market with none new listings, based on Brown Harris Stevens. “Any quantity over 6 months tells us there’s an excessive amount of provide and we’re in a purchaser’s market,” based on the Brown Harris Stevens report.

The falling costs and rising variety of unsold flats in Manhattan stand in distinction to the nationwide actual property panorama, the place continued tight provide continues to maintain costs excessive. Brokers and actual property analysts say the sturdy costs in Manhattan post-Covid grew to become unsustainable, and each patrons and sellers are lastly capitulating to the next rate of interest surroundings.

“The patrons and sellers resolve is weakening,” Miller mentioned. “At a sure level, they’ll solely wait so lengthy earlier than they really feel like they should make a transfer.”

With the hole narrowing between purchaser and vendor expectations, extra offers are closing. There have been 2,609 gross sales within the second quarter, up 12% from a yr in the past, based on the Douglas Elliman and Miller Samuel report. That marked the primary gross sales rebound in two years.

“Because the second quarter started, New York’s actual property market woke up from the doldrums during which it had languished for the primary quarter of 2024. Offers in all value classes started to emerge,” mentioned Frederick Warburg Peters, President Emeritus of Coldwell Banker Warburg.

Excessive rents in Manhattan are additionally persevering with to assist gross sales. The typical residence rental value in Could was nonetheless upward of $5,100 a month and rents are likely to rise within the late summer season. Many potential patrons who had been ready out the gross sales market in leases are lastly deciding to purchase, hoping rates of interest will begin to come down on the finish of 2024 or early 2025.

“If individuals had been sitting on the fence, the excessive rents perhaps helped push them into the gross sales market,” Miller mentioned.

Nonetheless, mortgage charges have a extra muted impact on Manhattan actual property than the remainder of the nation since most Manhattan gross sales are in money. Within the second quarter, 62% of offers had been all money.

Whereas costs fell for all segments of the Manhattan actual property market, the excessive finish is among the many weakest, as the rich maintain off on purchases till after the uncertainty of the elections. The median sale costs within the luxurious section — or the highest 10% of the market — fell 11% within the second quarter, based on Miller Samuel. Itemizing stock of luxurious flats surged 22%.

“With the excessive finish, this weak spot could possibly be the start of a pattern or only a one-off,” Miller mentioned. “We should see what occurs within the second half.”