The landscape of Manhattan real estate is undergoing a significant transformation, with apartment prices falling and inventory rising in the second quarter of 2024. Reports from Douglas Elliman and Miller Samuel indicate that the average real estate sales price in Manhattan has decreased by 3% to slightly over $2 million. Additionally, the median price has dropped by 2% to $1.2 million, marking a notable shift in the market. Luxury apartments, which have maintained high prices for over a year, have also experienced a decline in prices for the first time.
The price decreases in Manhattan can be attributed to a surge in the inventory of apartments for sale, which are now taking longer to be sold. Currently, there are over 8,000 apartments listed for sale in Manhattan, exceeding the 10-year average of around 7,000. This increase in supply has resulted in a 9.8 month supply of apartments for sale, indicating a shift towards a buyer’s market. According to Brown Harris Stevens, any supply number over 6 months suggests an oversaturation of the market in favor of buyers.
The changes in Manhattan real estate contrast sharply with the overall national real estate landscape, where prices have remained high due to limited supply. The post-Covid surge in Manhattan real estate prices has proven unsustainable, prompting both buyers and sellers to adjust to a higher interest rate environment. The weakening resolve of buyers and sellers has led to a narrowing gap between their expectations, resulting in an increase in closed deals.
Despite the challenges in Manhattan real estate, the second quarter of 2024 saw a significant uptick in sales, with 2,609 transactions, a 12% increase from the previous year. This rebound marked a shift from the stagnancy experienced in the market over the past two years. High rental prices in Manhattan have also played a role in driving sales, with the average apartment rental price reaching $5,100 per month in May. As rents continue to rise, prospective buyers are transitioning from rentals to purchases, hoping to capitalize on potentially decreasing interest rates in the coming months.
While mortgage rates typically influence real estate markets, Manhattan has a unique trend, with the majority of sales conducted in cash. In the second quarter, 62% of deals were completed in cash, minimizing the impact of fluctuating mortgage rates on the market. Despite price decreases affecting all segments of the real estate market, the luxury segment has been particularly weak. The median sale prices for luxury properties, representing the top 10% of the market, fell by 11% in the second quarter, with a 22% increase in listing inventory.
Manhattan’s real estate market is facing a shift towards a buyer’s market, characterized by falling prices, increased inventory, and a growing number of closed deals. As the market dynamics continue to evolve, prospective buyers and sellers will need to adapt to the changing environment in order to achieve their real estate goals.