Image source: Architectural Digest
Apartment: The steep 29% fall in apartment sales in Manhattan during the fourth quarter alarmed people.
The drop has sparked worries that the market would stagnate due to buyers’ and sellers’ uncertainty due to the state of the economy and interest rates.
The news
According to research by Douglas Elliman and Miller Samuel, there were 2,546 sales made overall in the fourth quarter.
Despite being excellent, the figures were 3,560 less than the previous year.
Since the pandemic’s peak in the third quarter of 2020, the drop has also been the highest.
The median price did, however, reduce by 5.5%, signaling the first price decline since early 2020.
Market
The sales and prices decline signal the end of Manhattan real estate’s recovery from the pandemic’s most severe effects and cast some doubt on new issues in 2023.
The following have had a significant impact on the Manhattan real estate market and are likely to influence it this year:
- Rising interest rates
- A weaker economy
- A declining stock market
Concerns
The biggest concern, according to analysts, is a prolonged standoff between buyers and sellers.
Since sellers are unwilling to sell as prices drop, there won’t be any buyers until prices fall.
Jonathan Miller serves as the CEO of Miller Samuel, an appraisal firm that carries out market research.
“I could see the market moving sideways, with some modest declines in some sectors,” said Miller.
“And it could weaken further if there is the backdrop of recession and job loss.”
Inventory
Inventory is still low despite falling prices and sales since some sellers are postponing their listings.
According to the study, there were 6,523 units available after the fourth quarter.
The numbers are still below the historical average of nearly 8,000, despite a 5% increase.
Because inventory hasn’t greatly expanded, analysts anticipate prices won’t drop enough to draw in customers waiting for discounts.
According to Serhant, there was a gap between the initial list price and the sales price was 6.5%, as opposed to the third quarter’s 4.1%.
Jonathan Miller says that more Manhattan buyers opted for all-cash buys when borrowing rates climbed.
The deals account for the most significant percentage of sales ever: 55% for the entire fourth quarter.
Read also: Prices in the past year: the good and the bad
Luxury units
The vast majority of the market is still comprised of luxury and high-end flats.
In terms of New York’s real estate market, they are in the top 10%.
The median sales price for luxury apartments increased by 4% in the fourth quarter, in contrast to a decline in the overall Manhattan market.
In addition, the median price for high-end and luxury apartments has increased by 21% since 2019 — twice as much as the market as a whole.
2023 outlook
The network of current and recently signed partnerships indicates that the first quarter will progress slowly.
According to Brown Harris Stevens, only 2,312 contracts were signed in the fourth quarter, down more than 43% from 2022.
The quarter was the worst for signing new contracts in the previous ten years, according to Serhant.
“Contracts signed are a timelier indicator of demand and registered one of the slowest finishes to any year since 2008,” said Brown Harris Stevens.
However, brokers are still optimistic because many believe this year will bring a pleasant surprise.
They cited the rates stabilizing and buyers finding bargains in a market that is now cooling.
Deals
John Gomes, the co-founder of the Eklund Gomes team at Douglas Elliman, described December as being “on fire” due to the volume of year-end deals.
“It really caught us off guard,” said Gomes.
“Things really turned around in December.”
According to John Gomes, a buyer paid $20 million for a Greenwich Village townhouse even though it wasn’t on the market.
He also asserted that a property investor made offers for specific flats in the development, which today seemed to be approved.
Foreign influence
Gomes attributed the increase in business in December to foreign customers, many of whom started returning to New York in December.
Global travel restrictions are progressively loosening, and the dollar is somewhat declining.
Brokers assert that in December, consumers returned, mainly from China and the Middle East.
To avoid rising interest rates, buyers are spending cash and taking advantage of lower prices, according to brokers.
Developers of new apartment buildings are also lowering prices to clear any unsold units.
“Developers are being realistic, they’re making concessions on price and closing costs,” said John Gomes.
“I feel optimistic about the coming year.”
Reference:
Manhattan apartment sales plunge in fourth quarter as brokers fear a frozen market
