Last quarter, the Manhattan housing market experienced its most pronounced third-quarter slowdown since the fall of Lehman Brothers and the collapse of the national housing market in 2008.
Political uncertainty, global trade woes, and soaring home prices all contributed to the softening of the market, according to a new report by New York brokerage Stribling and Associates.
“The third quarter saw the least number of contracts signed for any third quarter since 2008. The main reason is pricing. No one wants to be ‘caught at the top’ and the perception is that over the next year prices will soften,” Stribling director of data and reporting Garrett Derderian tells Livabl.
The median sales price of a Manhattan home, including co-ops and condos, was $1.1 million last quarter — down 3 per cent year-over-year. Units lingered on the market an average of 137 days with sellers adjusting prices — and expectations — in order to make a sale. This was up from an average of 106 days one year ago.
The number of sales slipped 11 percent from this time last year and were down over 30 percent from the record highs in the third quarter of 2013.
Derderian categorizes the current state of the Manhattan housing market as “perplexing,” with economic signposts all pointing to a healthy housing market, when in reality it is weakening.
“Normally this would point to a robust housing market, as the financial sector is one of the key industries that influences real estate. However, with inventory hitting record levels, buyers have considerable options to choose from and little pressure to make a quick decision,” says Derderian.
Co-ops and condos accounted for 55 and 44 percent of sales, respectively. Condos were the most expensive, with an average price per square foot of $1,633. One-bedroom units made up 38 percent of all sales.
There were 7,487 units on the market at the end of the quarter, a new record. Condos made up the largest share of all inventory, with 50 percent. The downtown submarket accounted for 30 percent of all inventory.
Meanwhile, despite the perception of declining inventory and prices peaking, Derderian points out that inventory is actually growing.
“Now, we have a considerable amount of new development units on the market, in addition to the substantial amount of resale product. As properties have become more expensive and lingered, we have entered a buyers’ market. The options afforded to buyers have never been more robust,” says Derderian.
Sellers are adjusting prices across all market segments in order to sell while demand remains high. The average discount was 6.4 percent in the third quarter.
As we enter the fall homebuying season, buyers and sellers should be prepared for more of the same.
“We expect the outlook for the remainder of the year, as it relates to new contracts signed, to be slower when compared to years past as buyers evaluate all options,” predicts Derderian.
Several new construction projects still reportedly have legacy contracts in development that have only begun starting closings. The average and median prices city-wide should remain at current levels, or increase — even if it’s not an accurate picture of current market conditions, says Derderian.
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