The second quarter of 2024 has brought significant changes to the Manhattan real estate market, with prices declining and inventory increasing. Reports from Douglas Elliman and Miller Samuel indicate that the average sales price in Manhattan experienced a 3% decrease, now standing at just over $2 million. Additionally, the median price dropped by 2% to $1.2 million, marking the first decline in luxury apartment prices in over a year.
The price adjustments can be attributed to the growing inventory of apartments for sale, which are also taking longer to sell. Manhattan currently has over 8,000 apartments for sale, surpassing the 10-year average of approximately 7,000 units. This surplus has led to a 9.8 month supply of apartments for sale in Manhattan, signaling a shift towards a buyer’s market.
The contrast between Manhattan’s real estate market and the national landscape is apparent, as tight supply continues to uphold high prices in other regions. Despite the post-Covid surge in Manhattan real estate prices, brokers and analysts suggest that the market conditions have become unsustainable, prompting both buyers and sellers to adjust to a higher interest rate environment.
As buyer and seller expectations align more closely, the number of closed deals has risen. The second quarter witnessed a 12% increase in sales compared to the previous year, signifying the first sales rebound in two years. This shift has been noted by Frederick Warburg Peters, President Emeritus of Coldwell Banker Warburg, who observed an awakening in New York’s real estate market.
The persistently high rents in Manhattan have also played a role in driving sales, with the average rental price in May exceeding $5,100 per month. Many potential buyers who had been renting while awaiting market changes are now transitioning to purchasing, anticipating a possible decrease in interest rates by late 2024 or early 2025.
Unlike the rest of the country, Manhattan’s real estate market is less influenced by mortgage rates, as a significant portion of sales are conducted in cash. In the second quarter, 62% of transactions were all cash, emphasizing the distinct nature of Manhattan’s real estate landscape.
Luxury Segment Vulnerability
While price reductions were observed across all segments of the Manhattan real estate market, the luxury sector faced particular challenges. The median sale prices in the luxury segment, representing the top 10% of the market, decreased by 11% in the second quarter. Listing inventory for luxury apartments surged by 22%, indicating caution among wealthy buyers leading up to the upcoming elections.
Overall, the evolving dynamics in the Manhattan real estate market suggest a transition towards a buyer’s market in 2024. With prices adjusting, inventory increasing, and buyer-seller expectations aligning, the landscape of Manhattan real estate is poised for further shifts in the coming months.
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