Photo: Robert Clark
As 2017 drew to a close, sales activity in the Manhattan housing market recorded its lowest fourth quarter total in six years even as more listings hit the market.
What caused the dramatic decline in sales? Uncertainty and worry about the GOP major tax overhaul may have given many Manhattan homebuyers cold feet, according to a report released today by New York brokerage Douglas Elliman.
Sales dropped 12.3 percent from last year in the fourth quarter. There were 2,514 closed transactions in the fourth quarter compared to 2,868 sales recorded last year during the same period.
Closed sales were also down 25.4 percent from the previous quarter.
The slowdown in sales this fall was “likely due to the pending tax bill as consumers waited to see how it would impact housing,” says Jonathan Miller in the report. Miller is the CEO of Miller Samuel Inc and the author of the Elliman report.
However, the final tax law will have “more impact on higher end properties,” while entry-level buyers are likely not feel any impact.
“I expect more impact on sales than price trends in 2018,” Miller tells BuzzBuzzNews. But whether it’s sales or price trends affected, he expects the overall impact to be “modest.”
At the same time, the median price of a Manhattan home rose 1 percent annually to $1,060,000. The median price rose for the third consecutive quarter, primarily driven by re-sales says Miller.
In the fourth quarter, the average price of a Manhattan home fell below $2 million for the first time in seven quarters. The average price was $1.9 million, down 10.6 percent from 2016’s fourth quarter.
“A steady median sales price and declining average sales price indicates that the legacy pipeline is beginning to run low,” says Miller in the report.
A “legacy” contract is one that was signed several years ago when a building was still under construction but closes now that the building is complete.
But the question remains — how much longer we can expect to see “legacy” contracts influencing the Manhattan market?
“I think there is still more to go, but each subsequent quarter should see less impact,” Miller tells BuzzBuzzNews.
The number of homes for sale rose 1.1 percent from last year to 5,541 active listings in the fourth quarter. However, listing inventory was down nearly 11 percent from the previous quarter.
At an average of 97 days, homes took three days longer to sell in the fourth quarter compared to last year at the same time.
The average listing discount — the difference between the listing price and selling price — grew by 0.1 percent annually in the fourth quarter as “sellers traveled further to meet buyers on price.”
However, Miller says depending on the price point, it could be either the buyer or seller in control.
“Buyers are gaining control at the top and sellers are retaining control in the entry market,” Miller tells BuzzBuzzNews.
Meantime, the price of a Manhattan new construction home fell sharply from last year in the fourth quarter. The average price dropped 16.8 percent annually to $4 million, while the median price plunged 7 percent to $2.7 million in the fourth quarter.
New construction listing inventory grew by 0.7 percent, the second consecutive quarter of inventory expansion. Sales fell 19 percent annually, and homes were on the market longer than the same period last year. The average days on market was 190, up from 181 days recorded last year.
Click here to read the entire report.