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Manhattan apartment sales plunge 20% as buyers get pickier

By Oshrat Carmiel

October 10, 2016 9:00 AM SGT

There are a lot more apartments available for purchase these days in Manhattan. And fewer people are buying.

Sales of previously owned condominiums and co-ops fell 20% y-o-y in 3Q as potential buyers grew cautious amid more choices, according to an Oct 4 report from appraiser Miller Samuel and brokerage Douglas Elliman Real Estate. There were 5,290 resale apartments on the market at end-September, 53% more than in late 2013, the lowest point for listings.

The swelling inventory is providing an opportunity to New Yorkers shut out of a market in which construction has been dominated by ultra-luxury condos aimed at the wealthiest buyers. Resales, particularly those priced at less than US$1 million ($1.37 million), were in chronically short supply in recent years, and those that made it to the market sparked bidding wars. Now, more owners are listing apartments to profit from climbing values.

“Rapidly rising prices over the years have pulled more sellers into the market hoping to cash out,” Jonathan Miller, president of Miller Samuel, says in an interview. “But buyers are more wary. There isn’t the same intensity of activity to burn through the new supply.”

Buyers agreed to pay more than the asking price in just 17% of all condo and co-op deals that closed in 3Q, down from a record 31% a year earlier, according to Miller Samuel and Douglas Elliman. Consumers too are taking longer to make a decision. Previously owned properties that sold in the period spent an average of 72 days on the market, up from 67 days a year ago.

The median price of all resales in the quarter climbed 2.6% to US$950,000, Miller Samuel and Douglas Elliman say. That is a step down in a three-year period in which annual price growth once reached 18%. Many sellers have yet to accept that they can no longer name any price, and the disconnect between their expectations and what buyers are willing to pay is contributing to the drop in overall sales, Miller says.

Corcoran Group reports a 17% decline in completed apartment sales, with 3,418 homes trading hands in 3Q. The brokerage, which also released a report on the Manhattan market on Oct 4, says contracts fell 18% to 2,589, the lowest in almost five years, indicating that sales will continue to be down.

Sellers remain optimistic. The median condo asking price reached a record US$2.3 million, according to a separate Oct 5 report by Compass. The median for condos that went into contract, meanwhile, was US$1.6 million — about 18% less than the peak of US$1.94 million reached at end- 2014, the brokerage says.

“Prices have been going up in double digits for so many quarters now that it’s natural that the market needed to take a pause,” says Pamela Liebman, CEO of Corcoran. — Bloomberg LP

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