In recent reports, it has been revealed that Manhattan is transforming into a buyer’s market as apartment prices experienced a decline and inventory witnessed an increase in the second quarter of 2024. The average real estate sales price in Manhattan dropped by 3%, settling just above $2 million. Similarly, the median price faced a 2% decrease, reaching $1.2 million. Notably, luxury apartment prices also saw a decline for the first time in over a year. These significant price drops are attributed to the surge in the inventory of apartments available for sale, which are also taking longer to be sold.
Currently, there are more than 8,000 apartments available for sale in Manhattan, exceeding the 10-year average of approximately 7,000 apartments. This surplus in inventory has resulted in Manhattan now having a 9.8-month supply of apartments for sale. Any figure above 6 months suggests an oversupply, indicating that Manhattan is indeed a buyer’s market at present. According to Brown Harris Stevens, if no new listings were added to the market, it would take 9.8 months to sell all the existing apartments. This imbalance between supply and demand is contributing to the downward pressure on prices.
The scenario in Manhattan contrasted sharply with the national real estate landscape where sustained low supply has been keeping prices at elevated levels. Post-Covid, the strong prices in Manhattan were no longer sustainable, leading both buyers and sellers to adjust to a higher interest rate environment. This adjustment is reflected in the weakening resolve of buyers and sellers as they realize the need to make a move rather than wait indefinitely.
Nevertheless, the narrowing gap between buyer and seller expectations has resulted in increased deal closures. In the second quarter, there were 2,609 sales, marking a 12% year-over-year increase. This rebound in sales activity is a positive sign for the Manhattan real estate market after a prolonged period of stagnation. Additionally, high rental prices in Manhattan are influencing sales as tenants are now considering transitioning into the purchasing market with the hope of diminishing interest rates in the near future.
While mortgage rates have a less pronounced effect on Manhattan real estate due to the higher prevalence of all-cash deals, the decline in prices is evident across all segments of the market. The luxury segment, which represents the top 10% of the market, experienced a substantial downturn with the median sale prices dropping by 11% in the second quarter. The listing inventory for luxury apartments also saw a notable increase of 22%. This weakness at the high end may indicate a potential trend or could be a temporary anomaly based on the uncertainty surrounding upcoming elections.
The real estate landscape in Manhattan is undergoing a significant transformation in 2024, shifting towards a buyer’s market with declining prices and increased inventory. While challenges persist, such as the high rental prices and uncertainty in the luxury segment, the market is showing signs of adaptability and resilience. As buyers and sellers navigate this evolving market, the coming months will be crucial in determining the long-term trajectory of Manhattan’s real estate sector.
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