Manhattan real estate sales experienced a significant 38% decline in the first quarter. The combination of high mortgage expenses and elevated property prices has led to widespread affordability challenges for the masses.
Total sales volume slumped to $4.4 billion in the quarter, with 2,242 apartments and townhouses sold, compared to 2,546 sales in the first quarter of 2022, according to CNBC, citing a new report from real estate firm Douglas Elliman and Miller Samuel. The average price declined by 5% to $1.95 million, and the median sales price dropped 10% to $1.075 million.
The cooldown in Manhattan real estate market follows a 29% decline in sales in the fourth quarter and is only a sign the pandemic boom is coming to a close. One question realtors in the borough have is if prices can sustain lofty levels.
Jonathan Miller, CEO of Miller Samuel, the appraisal and research firm, said a seasonal uptick in sales this spring is expected but a lot of that depends on the Federal Reserve keeping interest rates steady from here.
One of the biggest mismatches realtors are complaining about is the gap in price between buyers and sellers. Low inventory still means it’s a seller’s market. There were 6,996 homes on the market last quarter, and that’s below a 5-year average of 7,200.
“There still is a disconnect between buyers and sellers.
“Sellers are not slashing prices left and right to get deals done. They have confidence. They feel like ‘if I lose a buyer there’s another one down the road waiting.’ There is a no panic selling, or thinking they have to get out now,” Jason Haber at Compass told CNBC.
The average discount buyers saw from the initial list price to sales was around 7%, up from 5% in the fourth quarter, according to Serhant. Many buyers fear they’re overpaying.
“Buyers for the last three quarters have been sitting back, waiting for massive reductions and they’re not coming,” said Noble Black of Douglas Elliman.
Frederick Warburg Peters, president of Coldwell Banker Warburg, recently noted in a report, “The big price decreases seem behind us, and property costs have plateaued.” This would be very problematic for those waiting on the sidelines who may have to chase if prices reaccelerate.
In the quarter, cash transactions reached an all-time high, accounting for 57% of total sales, according to Miller. Within the luxury segment, 75% of sales exceeding $5 million were completed in cash.
So inventory is tight, prices have yet to tumble though sales are sliding, and cash deals are hot: those appear to be the trends last quarter.