Manhattan’s real estate market is currently experiencing a shift towards becoming a buyer’s market. Recent reports have indicated that apartment prices in Manhattan have fallen, while inventory has risen in the second quarter of 2024. These changes have led to a decrease in the average real estate sales price in Manhattan by 3% to slightly over $2 million. Additionally, the median price has dropped by 2% to $1.2 million, and prices for luxury apartments have seen a decline for the first time in over a year.
One of the primary reasons for the price declines in Manhattan is the increasing inventory of apartments for sale. According to Jonathan Miller, CEO of Miller Samuel, there are now more than 8,000 apartments for sale in Manhattan, surpassing the 10-year average of approximately 7,000. This surge in available apartments has resulted in a 9.8 month supply of apartments for sale in Manhattan, indicating a shift towards a buyer’s market.
A buyer’s market is characterized by an excess of supply of housing units, making it favorable for buyers due to lower prices and more options. The current situation in Manhattan, with an oversupply of apartments and declining prices, indicates that buyers have the upper hand in negotiations. In contrast, a seller’s market occurs when there is limited supply and high demand, leading to higher prices and bidding wars among buyers.
While Manhattan is experiencing a buyer’s market, the national real estate landscape continues to see tight supply levels, which have kept prices high in other parts of the country. The falling prices and rising inventory in Manhattan appear to be an anomaly compared to the broader trend of increasing real estate prices in the United States.
Several factors have contributed to the current state of the Manhattan real estate market. The post-Covid era saw a surge in real estate prices, which have now become unsustainable. Buyers and sellers are adjusting to a higher interest rate environment, leading to a slowdown in the market. The gap between buyer and seller expectations is narrowing, resulting in more closed deals.
Despite the current challenges in the Manhattan real estate market, there are signs of recovery. The increase in sales in the second quarter, along with high rental prices, may drive more buyers to enter the market. Many potential buyers who were previously renting are now considering purchasing a property, especially if interest rates begin to decrease in late 2024 or early 2025. Additionally, the majority of Manhattan real estate deals are cash transactions, which may insulate the market from fluctuations in mortgage rates.
Overall, while Manhattan is currently in a buyer’s market, there are indications that the market may stabilize in the future. The high-end luxury segment has seen a decline in prices, likely influenced by uncertainty surrounding elections. Whether this weakness is a short-term trend or a more prolonged shift remains to be seen.