Manhattan Real Estate Sales: Temperatures Aren’t The Only Thing Dropping
An oversaturated market is sending luxury properties plummeting.
It’s that time of year again—cooler weather has arrived. Central Park is turning gorgeous shades of red, yellow, orange and brown, New Yorkers are breaking out their chunky sweaters and pumpkin-spiced everything, and the dulcet tones of arguing over premature Christmas decorations fills the air.
The arrival of fall isn’t the only change in the air, however. The New York real estate market is seeing some changes of its own.
Compared to last year, real estate sales in Manhattan dropped 19 percent for the third quarter, as the “one percent,” both domestic and foreign, curtails their spending. Far from an isolated incident, the sales slump hitting Manhattan is indicative of similar drops across the country’s real estate market, especially high-end properties. From the Hamptons (down 21 percent) to Aspen (down more than 42 percent), the luxury market is feeling the pinch.
Back here in Manhattan, there were just south of 3,000 sales in the third quarter—courtesy of Douglas Elliman and appraisal firm Miller Samuel—and what’s more, properties also “sat on the market longer, discounts were up and the inventory of houses listed jumped 11 percent.”
“The Manhattan market is going through a process of resetting,” said Miller Samuel CEO Jonathan Miller, “from the white-hot conditions of the past several years to something more sustainable in the long run.”
And there’s more: quite a few of the sales that were recorded are for properties that entered contract while still under construction during the booming conditions of 2014 and 2015—in fact, almost half of Manhattan’s luxury sales were new developments, meaning the lag effect will begin to wear off the rest of this year and beginning of next, most likely.
Gone too is the frequency of bidding wars on high-end properties that were so common in 2014 and 2015, dropping from 31 percent last year to around 17 percent, which while still considered above average, most of that 17 percent falls within the Manhattan market’s lower end (under $2 million).
Between oil prices, recessions abroad, and the uncertain effect the election will have on the stock market, the wealthy aren’t buying with the same abandon they once were, leaving many of Manhattan’s fresh-to-the-market luxury condos and apartments sitting unsold, further saturating an already over-saturated supply. Apartments priced above $5 million are in excess, “and more supply continues to come onto the market,” according to Miller, rising three times faster than existing apartment inventory.
It’s not all bad news, though. The third quarter also saw the average sale price rise 17 percent from the same period last year to $2.03 million, the median sale price is up eight percent to just over $1 million, and the average sale price for new developments has more than doubled to almost $5.5 million.
Needless to say, from the weather to the election to the real estate market, the winds of change are blowing harder than a Fox news pundit.
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