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. Reports indicate that the average real estate sales price in Manhattan has dropped by 3% to slightly over $2 million. Similarly, the median price has seen a decline of 2% to $1.2 million, while luxury apartment prices have fallen for the first time in over a year. This trend can be attributed to the increasing inventory of apartments for sale, which are also taking longer to sell. Currently, there are more than 8,000 apartments for sale in Manhattan, surpassing the 10-year average of about 7,000.
According to Jonathan Miller, the CEO of Miller Samuel, Manhattan now has a 9.8 month supply of apartments for sale. This means that it would take 9.8 months to sell all available apartments on the market without any new listings. Brown Harris Stevens notes that any supply figure exceeding 6 months indicates an oversupply, leading to a buyer’s market. This oversupply of apartments in Manhattan stands in stark contrast to the national real estate landscape, where tight supply continues to maintain high prices.
Real estate brokers and analysts agree that the strong prices in Manhattan post-Covid were unsustainable, resulting in both buyers and sellers adjusting to a higher interest rate environment. Jonathan Miller highlights that buyer and seller resolve is weakening, as the gap between their expectations narrows. This has led to an increase in closed deals, with 2,609 sales recorded in the second quarter, marking a 12% rise from the previous year. The first sales rebound in two years signifies a shift in the market dynamics.
High rents in Manhattan continue to play a significant role in driving sales, with the average apartment rental price exceeding $5,100 per month in May. As rents typically increase in the late summer, many potential buyers who were renting have now transitioned into the sales market. The hope for a decrease in interest rates towards the end of 2024 or early 2025 is also motivating buyers to make their move now.
While prices have fallen across all segments of the Manhattan real estate market, the luxury segment is particularly struggling. The wealthy are holding off on purchases, anticipating clarity post-elections. The median sale prices in the luxury segment, representing the top 10% of the market, saw an 11% decline in the second quarter. Additionally, listing inventory of luxury apartments surged by 22%, indicating a potential trend or a temporary slowdown in this high-end market.
The Manhattan real estate market is experiencing a significant transformation, transitioning into a buyer’s market with falling prices and increasing inventory. The shifting buyer and seller sentiment, coupled with high rents and uncertainties in the luxury segment, are influencing the dynamics of the market. As the market continues to evolve, stakeholders need to adapt to these changing conditions to make informed decisions in this evolving real estate landscape.
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