Photo: Robert Clark
The vigorous sales activity seen in the Manhattan housing market during the first quarter of this year spilled over into the second quarter. Sales activity grew despite prices hitting record highs amid dwindling inventory, according to a newly released report by New York brokerage Douglas Elliman.
Overall sales activity, which includes new construction and resale, rose over 15 percent from last year to 3,153 transactions in the second quarter. This also marked an increase of 9 percent from the previous quarter. In the resale submarket, the number of sales jumped over 16 percent from last year in the second quarter.
Both the average and median prices set new records, $2.1 million and $1.1 million, respectively. Manhattan’s average price rose nearly 8 percent from last year, while the median price recorded a 7.3 percent increase from last year in the second quarter.
Meanwhile, in the new construction submarket, the median price increased nearly 23 percent year-over-year to $3.3 million in the second quarter. This was likely due to “the impact of legacy contracts from several years ago” still affecting current pricing, says Jonathan Miller, CEO of the appraisal firm Miller Samuel, Inc. and author of the Elliman report.
Inventory continued to tighten in the second quarter, falling 0.6 percent from last year. However, listing inventory was up 7.6 percent from the previous quarter in the second quarter. Resale listing inventory fell 1.3 percent year-over-year in the second quarter — the first annual decline in over 3 years.
“High sales, record prices, resale inventory beginning to slip and still plenty of bidding wars, is what we have seen in the second quarter of 2017,” says Miller.
Manhattan homebuyers are still fiercely competing for a shrinking number of homes, which is impacting prices.
Still, despite there being less available homes for sale, Manhattan homes were on the market nearly an average of 20 days longer than last year in the second quarter.
“Marketing time keeps expanding because buyers won’t budge and that is making for more sales as sellers recognize that,” observes Miller.
And, even if Manhattan’s construction levels were to increase, that might not help it’s dwindling inventory.
“We aren’t building what is in most demand — entry- and mid-tier product. This is a national condition as well, and I suspect inventory will get tighter before it normalizes,” Miller tells BuzzBuzzNews.
And that could be a long way off, adds Miller.
It is also likely that the Manhattan market’s robust sales pace is far from becoming a long-term trend.
“Resale inventory has increased 52 percent in four years, from a record low to more balanced levels. Although one data point doesn’t make a trend, I’d say we have plenty of room for inventory to fall if history teaches us anything,” Miller tells BuzzBuzzNews.
Homebuyers who are being priced out of Manhattan’s vigorous market are moving to the suburbs in record numbers, and that could be a good thing for the overall market.
“We are seeing near record sales volume in the outlying suburbs, acting as a release valve for the city’s affordability crisis. While bidding wars still exist, the market was far tighter in mid-2015. What’s better about this scenario than the decade-ago bubble is that access to credit has kept potential runaway growth in check,” says Miller.
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