A sign advertising a home for sale is pictured outside a Manhattan building in New York City on April 11, 2024.
Spencer Platt | Getty Images
Manhattan is becoming a buyer's market as apartment prices fell and inventory increased in the second quarter of 2024, according to new reports.
According to a report by Douglas Elliman and Miller Samuel, the median sale price for Manhattan real estate fell 3% to just over $2 million. The median price fell 2% to $1.2 million, and prices for luxury apartments fell for the first time in more than a year, the report said.
The price drop is due to a rising inventory of apartments for sale, which are also taking longer to sell. There are currently more than 8,000 apartments for sale in Manhattan, which is higher than the 10-year average of about 7,000, according to Jonathan Miller, chief executive of Miller Samuel, the appraisal and research firm.
According to Brown Harris Stevens, Manhattan currently has a 9.8-month supply of apartments for sale, meaning it would take 9.8 months to sell all the apartments on the market without any new listings. “Anything over 6 months tells us there is too much supply and we are in a buyer's market,” according to the Brown Harris Stevens report.
Falling prices and the growing number of unsold apartments in Manhattan stand in contrast to the national real estate landscape, where a shortage of supply continues to keep prices high. Real estate brokers and analysts say high prices in Manhattan post-COVID have become unsustainable and both buyers and sellers are finally capitulating to a higher interest rate environment.
The sun sets over the skyline of midtown Manhattan and the Empire State Building in New York City, as seen from Jersey City, New Jersey, on April 23, 2023.
Gary Hershorn | Corbis News | Getty Images
“The resolve of buyers and sellers is weakening,” Miller said. “There comes a point where they can only wait so long before they feel they have to make a move.”
As the gap between buyers' and sellers' expectations narrows, more deals are being closed. There were 2,609 sales in the second quarter, up 12% from a year ago, according to the report by Douglas Elliman and Miller Samuel. That marked the first sales uptick in two years.
“As the second quarter began, New York's housing market emerged from its doldrums. “By the first quarter of 2024, things had plateaued. Deals started to emerge across all price categories,” said Frederick Warburg Peters, chairman emeritus of Coldwell Banker Warburg.
High rents in Manhattan also continue to help sales. The median rental price for an apartment in May was still above $5,100 a month, and rents tend to rise in late summer. Many potential buyers who were waiting for the rental sales market to end are finally deciding to buy, hoping that interest rates will start to fall in late 2024 or early 2025.
“If people were on the fence, high rents may have helped push them into the sales market,” Miller said.
Still, mortgage rates have a more muted effect on the Manhattan housing market than the rest of the country, as most sales in Manhattan are done in cash. In the second quarter, 62% of transactions were done in cash.
While prices fell across all segments of the Manhattan real estate market, the luxury segment is among the weakest as the wealthy hold off on buying until after election uncertainty. Average sales prices in the luxury segment, or the top 10% of the market, fell 11% in the second quarter, according to Miller Samuel. The inventory of luxury apartments for sale rose 22%.
“At the high end, this weakness could be the beginning of a trend or just a one-off,” Miller said. “We'll have to see what happens in the second half.”
