Sales of Manhattan apartments fall to the lowest level in two years
- Co-op and condo sales dropped 37.5 percent in the first quarter of 2023
- Manhattan condo median sales price slipped 7.6 percent to $1,644,474
For the first time since the pandemic began, the overall market moved slower than the long-term average.
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Talk about a slowdown: Sales of Manhattan co-ops and condos fell to the lowest level in two years during the first three months of this year, dropping 37.5 percent compared to the first quarter last year. At the same time, Manhattan's normally teflon prices appear to be showing more vulnerability: According to the latest edition of the Elliman Report, the median sales price for apartments dropped 9.7 percent in the last quarter to $1,075,000.
But some of that weakness is a reflection of just how feverish the market was last year.
“Even though pricing is down 9.7 percent, it is down from the pandemic-era frenzy a year ago, when the median sales price was the second highest in history,” says Jonathan Miller, president and CEO of appraisal firm Miller Samuel and author of the report.
It's all about perspective: The first quarter sales report for Manhattan from Brown Harris Stevens identifies that although apartment sales fell compared to the same quarter last year, the sales volume is still slightly higher than it was in 2018, 2019, and 2020.
A slower pace gives buyers breathing room
The months of supply—the number of months it would take to sell all available inventory—was 9.4 in the first quarter of the year, according to the Elliman Report. For co-ops, the pace of the market was a little quicker at 8.1 months and for condos, a little slower, at 11 months. However, it’s the first time since the pandemic began, that the overall market has moved slower than the long-term norm of 8.5 months.
While sales have dropped, inventory remains relatively unchanged. The five-year average of inventory per quarter is 7,165 and in the first quarter of the year, inventory stood at 6,996. This is up a nominal 1.3 percent compared to the same quarter last year.
“If the pace of sales falls by more than a third you would expect inventory to pile up and that did not happen,” Miller says.
The reason for this is largely due to relatively higher mortgage rates and sellers unwilling to jump into the market: “People are wedded to their low rates,” Miller says. So anyone who purchased or refinanced in the past four years has a rate that is half the rate available now and is no doubt reluctant to move. “They lose that rate if they become a buyer,” Miller says.
Buyers and sellers can find agreement on pricing
The missing inventory surge is helping to lock prices down.
The median sales price for a Manhattan co-op was $799,000 in the last quarter, down 3.2 percent compared to the same period last year. The median sales price for a condo was down 7.6 percent year over year to $1,644,474.
The first quarter report from PropQuery, a real estate data firm, notes that in spite of a drop in sales, prices in Manhattan have remained remarkably stable. “At the luxury level, there seems to be little movement in prices overall,” says Garrett Derderian, author of the PropQuery report.
However, the first quarter report from Corcoran notes that sales under $1 million comprised 50 percent of Manhattan closings, their highest market share in three years. “This drove median price to its lowest point since the market pause and average price to a two-year low,” says Pamala Liebman, Corcoran’s president and CEO.
According to the first quarter Manhattan sales report from Coldwell Banker Warburg, moderate pricing has been the key for both buyers and sellers in Manhattan. “The deals which got made correlated strongly to price reductions or highly realistic listing prices. There has been no room for optimistic pricing in 2023,” says Frederick Warburg Peters, president of Coldwell Banker Warburg.
The Manhattan market report from SERHANT notes the market-wide average discount from initial ask was 7 percent, up from 5 percent last year.
Even so, there were still bidding wars taking place, albeit fewer than the same period last year. In the first quarter of the year, 5.3 percent of the closings went to bidding wars. A year ago, bidding wars were happening in 9.3 percent of sales.
Cash buyers have the floor
Rising mortgage rates means the market share of cash buyers in the past quarter was at an all time high—with 56.8 percent of all purchases being all cash.
Miller says it’s not that more people are paying cash but that fewer people are buying apartments with borrowed funds. "It’s not that everyone has the cash to buy, it’s that percentages are being skewed higher because fewer people are buying with mortgages,” Miller says.
The high-end market is where there is a greater share of cash buyers. For example, of the apartments sold in the $500,000-$1 million range, 51.8 percent of the properties that closed in the first quarter were sold to cash buyers. Of the properties sold in the $5 million and over range, cash buyers made up 75.9 percent.
According to SERHANT’s new development market report for Manhattan, the share of closings over $5 million in the first quarter, was 19 percent. The average discount was 4 percent, up from 3 percent the same period last year.
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