The landscape of Manhattan real estate is experiencing a significant shift, with apartment prices falling and inventory levels on the rise in the second quarter of 2024. Reports from Douglas Elliman and Miller Samuel indicate that the average sales price for real estate in Manhattan has dropped by 3%, hovering just above $2 million. Additionally, the median price has decreased by 2% to $1.2 million. Luxury apartments are also facing a decline in prices for the first time in over a year, signaling a change in the market dynamics.
One of the key factors contributing to this shift is the increasing inventory of apartments for sale in Manhattan. There are currently over 8,000 apartments on the market, surpassing the 10-year average of around 7,000 units. This surplus has created a 9.8 month supply of apartments for sale, indicating a buyer’s market where it would take nearly 10 months to sell all existing properties without any new listings. According to experts, any supply exceeding 6 months suggests an oversaturated market, favoring buyers over sellers.
The trends observed in Manhattan stand in stark contrast to the national real estate market, where limited supply continues to drive prices upwards. Brokers and analysts believe that the previous post-Covid boom in Manhattan’s real estate prices was unsustainable, leading to the current adjustments. With the gap between buyer and seller expectations narrowing, more transactions are being completed, with sales up by 12% in the second quarter compared to the previous year.
High rental costs in Manhattan are also playing a role in driving sales activity. Despite the decline in real estate prices, the average rental price for apartments remains above $5,100 per month. As rents typically increase in the late summer months, many individuals who were renting are now considering purchasing a property. The hope for a decrease in interest rates by the end of 2024 or early 2025 has encouraged some buyers to enter the market.
While mortgage rates have a less pronounced effect on Manhattan real estate due to a high percentage of cash sales, the luxury segment of the market has been particularly impacted. The median sale prices for luxury properties fell by 11% in the second quarter, with a notable 22% increase in listing inventory. Wealthier buyers are adopting a wait-and-see approach, delaying their purchases until after the uncertainties surrounding the upcoming elections are resolved.
The Manhattan real estate market is undergoing a transformation, transitioning into a buyer’s market with decreasing prices and escalating inventory levels. The shift in dynamics reflects a changing landscape, influenced by factors such as rising supply, narrowing buyer-seller expectations, and high rental costs. As the market continues to evolve, both buyers and sellers are adjusting their strategies to navigate the new realities of Manhattan’s real estate industry.