Same ole, same ole in Manhattan’s housing market during Q3 2018. The yearlong drop in sales fell to -4%…the first time since the financial crisis that re-sales of existing apartments have fallen for 4 straight quarters…and the yearlong drop in prices fell by -11%…the 4th straight quarter of double digit declines.
Clearly, the blip that came across everyone’s Manhattan housing market’s radar screen last year has turned into a slump. The average price of an apartment fell to $1.93M, down -4% and the median price of an apartment, down -5%, fell to $1.1M.
What is new in Manhattan’s Q3 2018 housing market is that sales and prices of entry-level apartments fell. (Entry-level apartments in Manhattan are defined as apartments selling under $1M.) The sale price of an average one-bedroom apartment fell to $815,000, a decline of -4% when compared to the same time last year.
In fact, according to Douglas Elliman Real Estate and Miller Samuel Real Estate Appraisers and Consultants for all of this data, most of the inventory growth during Q3 2018 happened in studio and one-bedroom apartment supplies.
Brokers credit the falloff in the entry-level sales to just one cause, rising interest rates. Since 50% of Manhattan’s buyers purchase homes with the help of mortgage loans and the other 50% purchase with cash, it’s clear that rising interest rates affected the decline in entry-level sales.
Brokers credit several causes for-12% falling prices within the Q3 2018 luxury market beyond the +27% spiking inventories and now common and higher discounts in the luxury tier. These causes include an oversupply of luxury units, a decline in foreign buyers and changes in the tax laws that make it more expensive to own property in a high tax state like New York. Even sales of luxury apartments within new developments dropped by -22% during Q3 2018.
Despite sales and price levels dropping, Jonathan Miller of Miller Samuels believes that these levels continue to be on the “higher side or right in the middle” of historic averages in Manhattan’s housing market. “We’re in reset mode and I think we still have a little way to go…this (reset) isn’t anything like Q1 2009. We’re resetting to a lower level (than the aspirational levels of 2014 and 2015), but it’s still not ‘low.’”
