Manhattan real estate sales fell 38% in the first quarter as buyers and sellers competed for prices and mortgage rates remained volatile, according to new reports.
Total sales volume fell 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 a report by Douglas Elliman and Miller Samuel. The average sale price fell 5% to $1.95 million and the median sale price fell 10% to $1.075 million, according to the report.
The drop in sales and prices follows a 29% fall in the fourth quarter and suggests that the country’s largest real estate market is correcting after a post-pandemic boom in prices and demand. The big question for brokers, buyers and sellers is where the new “bottom” will be in Manhattan.
“I think we’ll see a slight seasonal uptick in the spring,” said Jonathan Miller, CEO of Miller Samuel, the ratings and research firm. “But that partly depends on the fact that [Federal Reserve] keep rates where they are.”
Brokers say the biggest challenge for trading is the wide spread between buyer and seller price expectations. Relatively low inventory levels, or unsold listings, mean shoppers still don’t have much to choose from in Manhattan. There were 6,996 homes on the market in the first quarter, slightly below the five-year average of about 7,200, according to Miller Samuel.
“There’s always a disconnect between buyers and sellers,” said Jason Haber of Compass. “Sellers don’t slash prices left and right to get deals. They have confidence. They feel like ‘if I lose a buyer, there’s another one down the road waiting.’ there’s no panic to sell or think they have to get out now.”
Sellers slashed prices, but not enough for today’s bargain-hunting shoppers. The average discount between the initial list price and the sale price in the first quarter was 7%, compared to 5% in the fourth quarter, according to Serhant. “Weary buyers were always in a strong position to negotiate,” according to Coury Napier, director of research at Serhant.
Buyers are always worried about paying too much in the face of a potential recession, a volatile stock market and a banking crisis. Many brokers say buyers have been calling for months with expectations of price drops of 20% or more – only to be disappointed.
“Buyers for the past three quarters have been sitting around waiting for massive discounts and they’re not coming,” Douglas Elliman’s Noble Black said. “And I don’t think those big cuts will come.”
As Frederick Warburg Peters, chairman of Coldwell Banker Warburg, said in his first quarter report, “the steep price declines seem behind us and property costs have plateaued.”
Bids and interest remained particularly strong for the high end. The share of luxury sales — or deals in the top 10% of the market by price — that resulted in bidding wars hit an all-time high of more than 11% in the quarter, Miller said. . Brokers say affluent buyers generally prefer to pay cash and are therefore less affected by rising mortgage rates.
Overall, cash transactions reached a record 57% of all sales in the quarter, Miller said. At the high end of the market, three-quarters of all sales over $5 million were all cash.
Brokers say they see signs that the second quarter will be stronger, especially as the high-end market has improved in the first quarter. According to the Olshan report, contracts for the sale of properties priced at $4 million or more increased from an average of 16 transactions per week in January to 32 transactions per week in March.
Yet much depends on the future of interest rates and the economy as a whole. Because New York is home to so many finance-bound buyers and sellers, stock market performance could also shape Manhattan’s real estate market this spring and summer.
“From what I see now, we’re getting to a healthier place in the spring,” Black said. “It’s not a seller’s market at all, but it’s getting busier every month.”