Manhattan co-op and condo deals fall to lowest level in three years
- Owners remain ‘locked-in,’ unwilling to sell and give up their low interest rates
- An increase in signed contracts fuels expectations for stronger second quarter
The number of Manhattan co-op and condo deals fell below 2,000 for the first time in three years.
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The number of buyers paying cash for Manhattan co-ops and condos rose again in the first quarter of 2024 compared to a year ago, but it was not enough to boost sales volume.
The number of deals fell below 2,000 for the first time in three years, despite all-cash deals accounting for 63.4 percent of all transactions, the third-highest level on record, according to the latest edition of the Elliman Report for Manhattan co-ops and condos. (In the fourth quarter of 2023, cash deals hit 67.9 percent, up from 56.7 percent in the third quarter.)
The number of co-op and condo listings slipped 1.6 percent lower year over year, reaching pre-pandemic levels, which Jonathan Miller, president and CEO of appraisal firm Miller Samuel and author of the report, attributes to the “lock-in effect.” That’s a reference to owners sitting on rates in the 3 percent range, which makes them unwilling or unable to put properties on the market with rates for new purchases hovering below 7 percent.
It was the fourth, consecutive quarter with a drop in listings, his report notes. However, luxury listings increased year over year for the first time in four quarters.
The median sales price for Manhattan co-ops and condos in the first quarter was $1,049,399, representing a drop of 2.4 percent compared to a year ago. (If you look at price trends for co-ops and condos separately, however, they tell a different story: all indicators were up for co-ops but down for condos.)
Four out of 10 resales that closed in the quarter saw price cuts, more than the previous year, Miller notes. And first-time buyers accounted for slightly more than one out of four sales, the lowest level in a decade.
“That’s a statement on affordability,” Miller says, since this type of buyer tends to rely on financing.
Contract activity increases
The first quarter Manhattan sales report released by SERHANT notes that an increase in Manhattan contract activity, a forward-looking metric, year over year and quarter over quarter, indicates that “buyers are done with waiting,” says Coury Napier, director of research at SERHANT.
“The number of contracts signed in the first quarter grew 2.2 percent from last year and jumped 14.3 percent from the fourth quarter. This is an encouraging sign and hopefully reflects that prospective buyers are ready to make moves and stop waiting for rates to come down,” Napier says.
Upswing for high-end deals
In his latest quarterly market report for Coldwell Banker Warburg, Frederick Warburg Peters, president emeritus, writes that during the second week in March, the number of $4 million-plus contracts rose to 40, an amount not seen in well over a year.
Most notably, there was an increase in large co-op sales, which accounted for eight of the 25 $4 million-plus contracts during March’s third week, according to the report.
“While the majority of larger sales still fall between $4 million and $10 million, there have also been a few sales in the $20 million range. This demographic, however, has slowed substantially in volume since 2021. The really big condo buyers just don’t seem to be in town these days!” Warburg Peters writes.
A return to seasonality
BOND New York’s first quarter market report predicts a more active buying and selling season heading into the second quarter, after expected interest rate cuts lead to lower mortgage rates.
“This will be good news for buyers who have been waiting to decide their next move, and for sellers who have waited for months to list their property in hopes of more favorable financing for buyers,” the report says.
Optimistic about Wall Street bonuses
Brown Harris Stevens released its Manhattan first quarter sales market report. CEO Bess Freedman also expects sales activity to increase in coming months as mortgage rates drift lower and inflation continues to decline, Freedman writes.
“Demand for apartments will also be helped by the performance of stocks so far in 2024, and the $33.8 billion in Wall Street bonus money paid out for last year,” she writes.
‘Prices are trending downward’
Pamela Liebman, president and CEO at Corcoran, says in her firm’s market report that despite flat sales at the beginning of 2024 there are some signs that the Manhattan sales market is improving. In addition to an uptick in signed contracts for January and February, Liebman notes, "Currently, prices are trending downward, and buyers looking to maximize value for their dollar might just find what they are looking for,” she says.
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