The Manhattan real estate market is experiencing a shift towards becoming a buyer’s market, with apartment prices falling and inventory rising in the second quarter of 2024, as per recent reports. The average real estate sales price in Manhattan has dropped by 3%, settling just above $2 million. Similarly, the median price has decreased by 2% to $1.2 million, and prices for luxury apartments have experienced a decline for the first time in more than a year. The price adjustments are a direct result of the increasing inventory of apartments for sale, which are also taking longer to be sold compared to previous trends.
There are currently over 8,000 apartments for sale in Manhattan, surpassing the 10-year average of around 7,000, according to Jonathan Miller, CEO of Miller Samuel. The data illustrates a 9.8 month supply of apartments for sale in Manhattan, indicating a situation where it would take 9.8 months to sell all existing apartments on the market without any new listings. A supply exceeding 6 months signifies an oversupply, indicating that the market is favoring buyers, according to Brown Harris Stevens report.
The declining prices and increasing inventory of unsold apartments in Manhattan stand in contrast to the national real estate scenario, where a persistent shortage of supply continues to maintain high prices. Real estate experts attribute the sustained high prices post-Covid in Manhattan as being unsustainable, leading both buyers and sellers to reevaluate their positions in light of an environment with higher interest rates. The weakening resolve of buyers and sellers has ultimately resulted in more transactions closing in the second quarter, with a 12% increase in sales compared to the previous year.
High rents in Manhattan are also playing a role in driving sales, with the average apartment rental price in May still exceeding $5,100 per month. The ongoing trend of increasing rents, particularly towards the late summer, has prompted many potential buyers who were previously renting to consider purchasing a property. Some buyers are anticipating a potential decrease in interest rates towards the end of 2024 or early 2025, leading them to transition from renting to buying in the current market conditions.
Despite the influence of mortgage rates on real estate markets nationwide, Manhattan is less affected due to a significant portion of sales being conducted in cash. In the second quarter of 2024, 62% of deals were completed in cash. While prices across all segments of the Manhattan real estate market have declined, the luxury segment has been particularly affected, with the median sale prices falling by 11% and listing inventory of luxury apartments increasing by 22%. Wealthy buyers are exhibiting caution in their purchasing decisions, with many waiting to assess the outcome of the forthcoming elections before committing to buying high-end properties.
The Manhattan real estate market is facing challenges in 2024, resulting in a buyer’s market emerging due to falling apartment prices and increasing inventory. The discrepancy in supply and demand, contrasting the national real estate landscape, and the influence of high rents on sales are key factors reshaping the market dynamics. Moreover, the impact of mortgage rates, particularly in the luxury segment, highlights the cautious approach of buyers amidst political uncertainty. Moving forward, stakeholders in the Manhattan real estate market will need to navigate these challenges to adapt to the evolving market conditions and seize potential opportunities for growth.
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