What a difference a year makes. Q2 2017, Manhattan real estate prices hit record highs and consumers were paying…often more in bidding wars among each other.

Q2 2018, the story has changed. Prices fell 17% from Q2 2017, the lowest price levels since Q2 2009, according to a report from appraiser Miller Samuel, Inc. and Douglas Elliman Real Estate. Overall, the median price of all Manhattan units that changed hands in Q2 2018 dropped 7.5% to $1.1M, the second consecutive y/y decline.

There’s more to the Q2 2018 story in Manhattan real estate than prices. The Miller/Samuel and Elliman report tells us that 54% of the Q2 sold properties were sold for less than the asking price. The 37% of the properties sold for the asking price had already been reduced prior to the buyer coming into the deal. Combined, the number of purchases agreed to without a premium was the largest since 2012.

Another chapter in this Q2 2018 Manhattan real estate story line is inventory…. homes listed for sale at the end of June 2018 (6,985 homes) increased 11% from last year. This inventory uptick is the most since Q2 2011 when properties came to the market faster than buyers closed deals.

The Corcoran Group and Brown Harris Stevens brokerage firm added appendix insertions to the Q2 2018 Miller/Samuel and Elliman report. Corcoran indicated that contracts to buy fell to 3.109, -9% from Q2 2017, the lowest number of pending deals since 2011. And Hall Willkie, co-president of Brown Harris Stevens, added, “We are in a price correction (period at the moment)…buyers are very resistant to paying anything that isn’t justified…the mentality that prices will go up in 2 years is over.”

Rather than bidding wars that increased “best” prices for sellers, Q2 2018 experienced bidding wars that decreased “best” prices for buyers. And, if buyers didn’t get what they considered to be their “best” price, they walked.

The results of this “new” Q2 2018 mentality…the median price for a 3-bedroomoon the trendy Upper East Side tumbled -16% from a year ago to $3.075M; the media price for a 2-bedroom on the Upper East Side dropped -5% to $1.49M; and the median price for a 1-bedroom in the same neighborhood dropped -4% to $785,000.