A sign advertising a home for sale is displayed outside a building in Manhattan in New York City on April 11, 2024.
Spencer Platt | Getty Images
According to new reports, Manhattan is becoming a buyer’s market as apartment prices fell and inventory increased in the second quarter of 2024.
The median real estate sales price in Manhattan fell 3% to just more than $2 million, according to a report by Douglas Elliman and Miller Samuel. The median price fell 2% to $1.2 million, and prices for luxury apartments fell for the first time in more than a year, according to the report.
The drop in prices is the result of an increase in the inventory of apartments for sale, which are also taking longer to sell. There are now more than 8,000 apartments for sale in Manhattan, which is higher than the 10-year average of about 7,000, according to Jonathan Miller, CEO of Miller Samuel, the appraisal and research firm.
Manhattan now has a 9.8-month supply of apartments for sale, meaning it would take 9.8 months to sell all the apartments on the market without any new listings, according to Brown Harris Stevens. “Any number above 6 months tells us there is a lot of supply and we are in a buyer’s market,” according to the Brown Harris Stevens report.
The drop in prices and the increase in the number of unsold apartments in Manhattan contrast with the national real estate landscape, where persistently tight supply continues to keep prices high. Real estate agents and analysts say strong prices in post-Covid Manhattan have become unsustainable and both buyers and sellers are finally capitulating to a higher interest rate environment.
The sun sets over the downtown Manhattan skyline and the Empire State Building in New York City, as seen from Jersey City, New Jersey, on April 23, 2023.
Gary Hershorn | Corbis News | Getty Images
“The position of buyers and sellers is weakening,” Miller said. “At a certain point, they can only wait so long before they feel like they have to make a move.”
As the gap between buyer and seller expectations narrows, more deals are being closed. There were 2,609 sales in the second quarter, up 12% from a year earlier, according to the Douglas Elliman and Miller Samuel report. This marked the first rebound in sales in two years.
“As the second quarter began, the real estate market in New York woke up from the darkness In which it had fallen for the first quarter of 2024. Deals in all price categories began to appear,” said Frederick Warburg Peters, President Emeritus of Coldwell Banker Warburg.
High rents in Manhattan are also continuing to help sales. The median apartment rental price in May was still above $5,100 per month, and rents tend to rise in late summer. Many potential buyers who have been waiting for the sale-leaseback market are finally deciding to buy, hoping that interest rates will start to come down in late 2024 or early 2025.
“If people were sitting on the fence, the high rents probably helped push them into the sales market,” Miller said.
However, mortgage rates have a more muted effect on Manhattan real estate than the rest of the country since most Manhattan sales are cash. In the second quarter, 62% of deals were all cash.
While prices fell across all segments of the Manhattan real estate market, the high end is among the weakest as the wealthy hold off on purchases until after the uncertainty of the election. Average sales prices in the luxury segment – or the top 10% of the market – fell 11% in the second quarter, according to Miller Samuel. Luxury condo listing inventory increased 22%.
“With the high finish, this weakness could be the start of a trend or just a one-off,” Miller said. “We will have to see what happens in the second half.”