Manhattan is becoming a buyer's market as home prices fall and inventory rises in the second quarter of 2024, new reports show.
The average sales price for Manhattan homes fell 3% to just over $2 million, according to a report from Douglas Elliman and Miller Samuel. The median price fell 2% to $1.2 million, and luxury apartment prices fell for the first time in over a year, according to the report.
The drop in prices is a result of the increasing supply of apartments for sale, which are also taking longer to sell. According to Jonathan Miller, CEO of appraisal and research firm Miller Samuel, there are currently more than 8,000 apartments for sale in Manhattan, which is more than the 10-year average of about 7,000.
Manhattan currently has a 9.8-month supply of apartments for sale, which Brown Harris Stevens says means it would take 9.8 months to sell all the apartments on the market without new listings coming in. “Any number above 6 months tells us there is too much supply and we are in a buyer's market,” the Brown Harris Stevens report states.
The falling prices and rising number of unsold apartments in Manhattan contrast with the national real estate landscape, where persistently tight supply continues to keep prices high. Brokers and real estate analysts say high prices in Manhattan have become unsustainable post-Covid, and both buyers and sellers are eventually capitulating to a higher interest rate environment.
The sun sets over the Midtown Manhattan skyline and the Empire State Building in New York City, as seen from Jersey City, New Jersey, on April 23, 2023.
Gary Hershorn | Corbis News |
“Buyers and sellers are losing their resolve,” Miller said. “At a certain point, they can't wait much longer before they feel like they have to take action.”
As the gap between buyers' and sellers' expectations narrows, more deals are being closed. According to the Douglas Elliman and Miller Samuel report, there were 2,609 sales in the second quarter, up 12% from the previous year. This was the first rebound in sales in two years.
“At the beginning of the second quarter, the New York real estate market awoke from the doldrums where it was languishing in the first quarter of 2024. Deals started to appear in all price categories,” said Frederick Warburg Peters, president emeritus of Coldwell Banker Warburg.
High rents in Manhattan also continue to encourage sales. The average rental price for an apartment was still above $5,100 per month in May, and rents tend to rise in late summer. Many potential buyers who had been waiting out the rent-to-own market are now finally deciding to buy, hoping that interest rates will start to fall in late 2024 or early 2025.
“If people were undecided, the high rents may have pushed them to enter the purchase market,” Miller said.
However, mortgage rates have less of an impact on the Manhattan real estate market than in the rest of the country because most sales in Manhattan are made with cash. In the second quarter, 62% of transactions were made with cash.
While prices fell across all segments of the Manhattan real estate market, the high-end segment is among the weakest as the wealthy wait to buy until after election uncertainty. Median sales prices in the luxury segment — or the top 10% of the market — fell 11% in the second quarter, according to Miller Samuel. Luxury housing supply rose 22%.
“At the top end, this weakness could be the start of a trend or just a one-off event,” Miller said. “We'll have to wait and see what happens in the second half.”