Manhattan home sales declined 46% in the third quarter as homebuyers continued to flow into the suburbs and Florida, according to new reports.
There are currently around 10,000 apartments for sale in Manhattan, which would be a record according to Compass. With so many new offers on the market and so few buyers, the stock of unsold homes continues to grow in a city that experienced a flood of high-end homes before the pandemic. According to a report by Miller Samuel and Douglas Elliman, the current supply of luxury apartments would take nearly three years to sell.
“There is no shortage of homes for sale, but there is a shortage of buyers,” said Jonathan Miller, Miller Samuel CEO.
A total of 1,375 sales were made in the third quarter, 44% fewer than in the third quarter of the previous year. The prospects of a turnaround before the elections also appear increasingly unlikely. According to Miller Samuel, September signed contracts in Manhattan were down 42% year over year.
Manhattan is dealing with high unemployment, rising crime, growing sanitation and public transportation problems, and only 10% of Manhattan office workers return to their buildings. All of this leaves buyers reluctant to place a big bet on Manhattan real estate.
The likelihood that taxes will rise to pay the city and state’s billion dollar budget holes is also driving more and more city real estate dollars to the suburbs and other states. Contracts signed in the Hamptons were up 76% year over year in September. They rose 56% in Westchester County, New York and 36% in Fairfield County, Connecticut.
Florida saw a sustained surge in purchases, with signed contracts for homes increasing 62% in Palm Beach County and 21% in Miami Dade County.
Aside from city flights, the Manhattan real estate market continues to suffer from high prices. Realtors have been promoting a Manhattan “buyers market” for months, saying prices will fall and attract tempting shoppers and families who have been waiting for years to buy in Manhattan.
However, the average Manhattan sales price rose 32% to $ 2.18 million in the third quarter. The median sales price also increased 7% to $ 1.1 million.
Analysts say the increase was mainly due to statistical issues. Activities in the third quarter of 2019 were hampered by the introduction of the city’s villa tax. A spate of expensive deals negotiated years ago in the new luxury condominium tower 220 Central Park South also raised prices.
Analysts also say that average and median sales prices in Manhattan are more a reflection of the homes sold than a way of measuring the value of the same home over time. As more larger, more expensive apartments were sold in the third quarter, the average and average prices were higher.
A more precise representation of the price reductions is the average discount between the offer price and the sales price. Homes in the third quarter sold at an average discount of 9% – compared to a more typical 5% discount before the coronavirus pandemic.
Still, the average price per square foot in Manhattan also rose in the third quarter, suggesting that prices must fall even further before shoppers tumble in.
“If you look at 2009 and then September 11th, salespeople can take a few years to adjust,” Miller said.
Miller said he didn’t expect real prices to fall more than 10%. Before the pandemic, prices had already fallen 15% from the 2015-2016 peak, he said. So the 25% combined discount off the peak should be enough to draw shoppers back to town, he said.
“But it all depends on quality of life issues like police, sanitation and public transport,” he said. “I don’t see any improvement in the market in the fourth quarter. But I think we could see a notable improvement in 2021.”