Manhattan apartment sales drop 30% in June, prices remain high
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Contracts for the sale of apartments in Manhattan fell by nearly a third in June as the city’s scorching real estate market began to cool amid recession fears and falling inventories.
New York real estate was on a tear in the early spring, with high prices and strong sales. The second-quarter median selling price hit a record $1.25 million, according to data from firms Miller Samuel and Douglas Elliman. The number of sales – at more than 3,800 – was the highest total for the second quarter since the housing boom of 2007.
However, most of these agreements were negotiated at the beginning of the year. Real estate brokers and analysts say the Manhattan market fell sharply in June as stocks and crypto declined, interest rates rose, and economists began discussing the potential for a recession.
Contracts for the sale of co-ops and condos in Manhattan fell 30% in the quarter compared to June 2021, according to Miller Samuel and Douglas Elliman.
“Throughout the second quarter, this downturn accelerated: fewer contracts signed, fewer bidding wars, more price reductions and a gradual increase in available inventory,” wrote Frederick Warburg Peters, president of Coldwell. Banker, in a market report. “The gradual downturn in the sales market is manifesting in all boroughs and at all price points across the city.”
Manhattan’s decline is particularly sudden given that the market is geared towards upscale and wealthier buyers who are less dependent on mortgages and rising rates. In the second quarter, 53% of all apartment purchases in Manhattan were made in cash. At the high end, it’s even higher — 99.6% of purchases over $4 million were cash, according to Jonathan Miller, CEO of Miller Samuel.
Brokers say Manhattan’s wealthiest buyers are more scared of stock market declines and crypto losses than higher mortgage rates. Added to this are ongoing concerns about crime and New York’s high taxes.
“It’s a market in transition,” said Bess Freedman, CEO of Brown Harris Stevens. “Buyers are in the driver’s seat right now. There’s just a lot of uncertainty and lower confidence.”
Prices haven’t started falling yet – at least not globally. But brokers say buyer attendance at open houses and multiple offers have all but evaporated. McKenzie Ryan, one of Douglas Elliman’s top New York brokers, said one of his clients was a family in Manhattan who had a baby and were looking for more space with a budget of around $4 million. .
“They just decided to completely stop their research,” Ryan said. “They still need space, but interest rates and economic fears are causing people to pause.”
Buyers are not showing up at open houses or exhibitions like they were even in April. She said she had a roster that month that drew 31 people to the open house. When she held an open house for a similar listing and award in June, only four people showed up.
Along with finance buyers worried about financial markets, workers and tech and venture capital executives in Manhattan are also retreating from real estate, fearing layoffs and cost cuts.
“My tech clients are currently preparing for whatever happens,” Ryan said. “Some people have experienced a sharp loss of wealth since the start of the year.” Ryan said that when sellers now price their listings, they can’t use comparable prices from earlier in the year. She said some are slashing them by up to 10% from early 2022 comparables, but it all depends on the apartment.
“There just isn’t enough data in the market right now,” she said. “It’s just moving and changing so fast.”