- Manhattan condominium gross sales fell by almost 30% in the fourth quarter.
- Brokers are involved each consumers and sellers are staying on the sidelines.
Manhattan condominium gross sales fell by 29% in the fourth quarter, sparking fears of a frozen market in which consumers and sellers keep on the sidelines attributable to financial and charge fears.
There have been 2,546 gross sales in the quarter, down from 3,560 final yr, in response to a report from Douglas Elliman and Miller Samuel. The decline was the most important because the third quarter of 2020, through the depths of the pandemic.
Costs additionally declined for the primary time since early 2020, with the median worth down 5.5%.
The declines in each gross sales and costs mark the tip of the roaring comeback in Manhattan actual property after the worst days of the pandemic and lift fears of continuous weak point into the brand new yr. Rising rates of interest, a weaker financial system and a falling inventory market, which has an outsized affect on Manhattan actual property, are all prone to weigh available on the market this yr.
Analysts say their large fear is a extended standoff between consumers and sellers — with sellers unwilling to listing amidst falling costs and consumers pausing their searches till costs fall additional.
“I could see the market moving sideways, with some modest declines in some sectors,” stated Jonathan Miller, CEO of Miller Samuel, the appraisal and market analysis agency. “And it could weaken further if there is the backdrop of recession and job loss.”
Even as costs and gross sales drop, nevertheless, stock stays tight as sellers maintain off on listings. There have been 6,523 flats available on the market on the finish of the fourth quarter, in response to the report, up solely 5% from final yr however nonetheless effectively beneath the historic common of round 8,000. With out a massive enhance in stock, analysts say costs are unlikely to fall sufficient to lure again many consumers ready for reductions. The common low cost from preliminary listing worth to gross sales worth was 6.5%, up from 4.1% in the third quarter, in response to Serhant.
Rising rates of interest have additionally moved extra Manhattan consumers into all-cash offers, which accounted for 55% of all gross sales in the fourth quarter, the best on file, in response to Miller.
As with a lot of the restoration, the high-end and luxurious phase stays the strongest. Median sale costs for luxurious flats — outlined as the highest 10% of the market — elevated 4% in the fourth quarter, in comparison with a decline in the broader Manhattan market. Median costs for luxurious flats are up 21% in comparison with 2019, twice the rise as the broader market.
The outlook for 2023
The pipeline of offers in the works or lately signed suggests a gradual first quarter. There have been solely 2,312 contracts signed in the fourth quarter, down 43% over final yr, in response to Corcoran. The quarter was the worst for brand new contracts signed in the previous decade, in response to a report from Serhant.
“Contracts signed are a timelier indicator of demand and registered one of the slowest finishes to any year since 2008,” in response to Corcoran.
Brokers, nevertheless, say they continue to be optimistic and lots of are predicting an upside shock in 2023, as charges stabilize and consumers discover alternatives in a softer market. John Gomes, co-founder of the Eklund Gomes staff at Douglas Elliman, stated December was “on fire” with a frenzy of year-end offers.
“It really caught us off guard,” he stated. “Things really turned around in December.”
Gomes stated one purchaser paid $20 million for a townhouse in Greenwich Village that wasn’t even available on the market. He stated a actual property investor made gives for 4 separate flats in new developments “that look like they will be accepted today.”
Ian Slater at Compass stated there was a large “disjoint” in the market in August and September, with a extensive divide between consumers and sellers and the market began to weaken. “Now I am seeing buyers accept interest rates as the new normal and feel more comfortable purchasing — or at a minimum that prices aren’t falling.”
Gomes stated one motive for the December burst of exercise is overseas consumers, who began to return to town in December. With the greenback weakening barely and journey restrictions lifting world wide, brokers say consumers from the Center East and China returned in December.
Brokers say consumers are additionally utilizing money to keep away from the upper rates of interest and profiting from decrease costs. And builders with new condominium buildings available on the market are decreasing costs to unload unsold flats.
“Developers are being realistic, they’re making concessions on price and closing costs,” he stated. “I feel optimistic about the coming year.”
Correction: There have been 2,312 Manhattan condominium contracts signed in the fourth quarter, in response to Corcoran. An earlier model of this story misstated the supply of that determine.