Manhattan market hits the 'reset' button as prices and sales continue to drop
If you’re trying to sell an apartment in Manhattan now, you probably already know that sales are slow, but with the release of the latest market snapshot, you have something about which to really complain.
The Manhattan sales market saw a “reset in activity” in the second quarter of 2018, according to Jonathan Miller, president of the appraisal firm Miller Samuel and author of the Douglas Elliman Report. There were declines in all the major indicators: Sales and prices were down, and inventory was up, and these shifts cannot be blamed on mere seasonality, Miller tells Brick Underground.
Miller notes that the second quarter recorded the most inventory in seven years and lowest second-quarter sales in nine years.
Still, it was not all record-setting worst-news scenarios: The year-over-year sales decline of 16.6 percent was less dramatic than the abrupt decrease in the first quarter, which saw a drop of 24.6 percent in closed sales. It was however the third consecutive quarter to see a decline in the number of sales.
In terms of sales, the Manhattan median sales price declined 7.5 percent to $1,100,000.
As inventory piles up, buyers face less competition, and the second quarter saw the smallest market share of bidding wars since 2012.
“Sales were down across all price points,” Miller says. He says that a rise in mortgage interest rates is hurting the starter market, which is heavily dependent on financing.
He also sees the market shifting toward smaller-sized apartments, which is having an impact on prices.
“Prices are not falling for a bulk of the market,” he notes. Median resale prices were up a modest amount, and resales represent most of the market, so price declines were a result of a “shift in the mix,” Miller says, from larger, more expensive apartments to smaller and therefore less expensive ones.
The new federal tax law, which is expected to have a serious impact on New York State because of the law’s cap on mortgage-interest deductions and on state and local tax deductions, is causing buyers and sellers here to “dance around” in a state of uncertainty as they try to determine what are today’s values, Miller says.
“Until people write checks to the IRS, we won’t understand what the actual impact of the new law will be,” Miller says.
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