The median price of a Manhattan apartment has fallen below $1m for the first time in three years, according to a survey of sales in the final months of 2018, as real estate agents struggle to shift a glut of luxury properties and potential buyers worry about the outlook for the US economy.
The median price paid for co-operatives and condominiums in the prime borough of New York City — some of the most expensive properties in the US — fell 5.8 per cent to $999,000 according to research by Miller Samuel, a real estate appraiser, and Douglas Elliman, a real estate broker.
There was a 25.5 per cent fall in the median sales price of new developments compared to the same period a year earlier, reflecting fewer sales of the highest-priced apartments. The median sales price for resale co-ops and condos rose 2.8 per cent.
Steven James, chief executive of Douglas Elliman, said a glut of luxury apartments was “still an issue” despite many having been taken off the market.
Part of the issue is fewer foreign buyers from China and Russia, he said. Until the end of 2017, there was a lower level of inventory and a large pool of buyers, which drove prices up — but a glut of luxury developments came on to the market around then, at the same time that foreign buyers began to retreat.
“Prices kept going up, up and up,” Mr James said. “The sellers are finally getting the message that they can’t expect the price they were expecting three or four years ago, and I think the buyer is much savvier.”
Buyers held back from striking deals over concerns about rising mortgage interest rates, financial market volatility and political uncertainty, while many felt that prices still have further to fall, according to separate research from Corcoran, one of the largest New York area real estate brokers.
The number of sales of Manhattan co-ops and condominiums last year was the lowest since 2009. But there were signs the decline was levelling out. The decline of 7 per cent in the fourth quarter was the most moderate year-over-year decline of 2018.
“Many prospective buyers are choosing to wait on the sidelines until prices adjust to a more accessible level and other market factors calm,” Pamela Liebman, chief executive of Corcoran, said in the report.
Inventory increased 10 per cent in the fourth quarter compared to the same period a year earlier, to just under 7,000 active listings. That is 66 per cent higher than a low hit just five years ago, and the highest for a fourth quarter since 2011.
While inventory rose in all areas of Manhattan, it was the highest in both the Upper East and West Sides, according to Corcoran.
The contraction in prices and the dips in sales are “a confirmation of what we saw starting at the end of 2017, which was that the consumer said ‘enough, we’re not going to pay that’”, Mr James said.
There may be more interest in real estate in New York outside of Manhattan, where prices are generally lower.
The property market in Brooklyn is “still strong”, while Queens “has enormous potential” with Amazon moving into the Long Island City neighbourhood, Mr James added. “It’s a great alternative. There’s great housing stock, and it’s suburbs without being in the suburbs,” he said.