The Manhattan real estate market is showing signs of becoming a buyer’s market as apartment prices have fallen and inventory has increased in the second quarter of 2024. Reports indicate that the average real estate sales price in Manhattan decreased by 3% to slightly over $2 million. Additionally, the median price experienced a 2% decline to $1.2 million, with luxury apartment prices falling for the first time in over a year. These price drops are attributed to the growing inventory of apartments for sale, which are now taking longer to sell. The current number of apartments for sale in Manhattan has surpassed 8,000, higher than the 10-year average of about 7,000, signaling an oversupply in the market.
Manhattan currently has a 9.8 month supply of apartments for sale, indicating that it would take 9.8 months to sell all existing apartments without any new listings. According to reports from Brown Harris Stevens, any supply over 6 months suggests an excess, pushing the market into a buyer’s market territory. This oversupply and decreased prices in Manhattan contrast with the national real estate landscape, where prices remain high due to limited supply. The decline in Manhattan prices is seen as a reflection of the post-Covid market and the current interest rate environment, leading both buyers and sellers to reconsider their positions.
Real estate experts and analysts argue that the strong prices in Manhattan following Covid were unsustainable, prompting a shift in market dynamics. With buyer and seller expectations aligning, more deals are closing, as evidenced by a 12% increase in sales in the second quarter compared to the previous year. This resurgence in sales activity marks the first rebound in two years, signaling a potential shift in the market.
High rents in Manhattan continue to drive sales, with the average apartment rental price still exceeding $5,100 per month. This trend has led many prospective buyers who were renting and waiting out the sales market to consider purchasing a property. The hope that interest rates may decrease towards the end of 2024 or early 2025 is further motivating buyers to enter the market.
Despite the positive sales activity, challenges remain in the Manhattan real estate market, particularly in the luxury segment. The wealthiest buyers are holding off on purchases due to uncertainty surrounding upcoming elections, leading to an 11% decline in median sale prices for luxury properties in the second quarter. Additionally, the listing inventory of luxury apartments saw a significant increase of 22%, indicating a slowdown in this market segment.
Real estate experts are divided on whether this weakness in the luxury segment is a temporary trend or the beginning of a larger shift in the market. The overall market sentiment is cautious, with both buyers and sellers navigating the changing landscape and adjusting their strategies accordingly.
The Manhattan real estate market is experiencing a shift towards a buyer’s market, with falling prices and increased inventory shaping the current landscape. Despite challenges in the luxury segment, overall sales activity is on the rise, driven by high rents and changing buyer sentiments. As the market continues to evolve, both buyers and sellers must remain vigilant and adaptable to capitalize on emerging opportunities.
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