Manhattan Real Estate Shifts to Buyer's Market Amid Price Drops and Rising Inventory

Manhattan Real Estate Shifts to Buyer's Market Amid Price Drops and Rising Inventory

It is a buyers’ market, without the buyers. Investors now know that the Democrats can steal your property at will. They can go after you in Soviet style trials if you dare cross them. Who in their right mind would invest in New York, or any Democrat controlled city and state?

Manhattan’s real estate market is showing signs of becoming a buyer’s market as of the second quarter of 2024, with falling apartment prices and an increase in inventory. A recent report from Douglas Elliman and Miller Samuel revealed that the average sales price for an apartment in Manhattan dropped by 3% to just over $2 million, while the median price decreased by 2% to $1.2 million. This downturn in prices includes luxury apartments, which have seen their first price drop in more than a year.

The increase in inventory is a significant factor contributing to the price reductions. Currently, there are over 8,000 apartments listed for sale, surpassing the 10-year average of about 7,000. This surplus has led to a 9.8-month supply of apartments on the market, indicating a strong shift towards a buyer’s market. A supply over six months typically signifies excess, and Manhattan is currently well above this threshold.

This local trend contrasts sharply with the national real estate scene, where a tight supply continues to buoy prices. In Manhattan, however, the post-Covid price strength has waned under the pressure of higher interest rates, leading to a realignment of buyer and seller expectations. As a result, the second quarter saw 2,609 sales, marking a 12% increase from the previous year and the first sales rebound in two years.

The high rental prices in Manhattan are also influencing the sales market. With average rents still above $5,100 a month and expected to rise further, many are choosing to buy instead of rent, spurred by the prospect of potentially lower interest rates towards the end of 2024 or early 2025.

Despite these changes, the impact of mortgage rates on Manhattan’s market is less pronounced than in other areas, as a significant portion of transactions, 62% in the second quarter, are conducted in cash. This dynamic could change, however, especially in the luxury segment, where median sale prices fell by 11% and inventory increased by 22%. The future of this segment remains uncertain, particularly with upcoming elections adding to the hesitancy among wealthy buyers.

Key Points:

i. Manhattan’s average apartment sales price decreased by 3% to just over $2 million in Q2 of 2024, signaling a shift towards a buyer’s market.

ii. Inventory levels surpassed the 10-year average, with over 8,000 apartments for sale and a 9.8-month supply indicating a surplus.

iii. Contrastingly, the national real estate market remains strong due to tight supply.

iv. High rents in Manhattan are pushing potential buyers towards purchasing, with expectations of declining interest rates.

v. The luxury segment in Manhattan is particularly weak, with a significant drop in prices and a surge in inventory, amid uncertainties including upcoming elections.

Lap Fu Ip – Reprinted with permission of Whatfinger News

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