Manhattan real estate has been on quite a ride during these last ten years. According CityRealty, a firm that tracks unit sales, the average price of a condominium rose 58% since 2008.
It’s a different story in Manhattan real estate today. Though demand continued at all price levels during 2018, bidding wars became increasingly past tense. Buyers became more discerning with increased inventory choices (+12% more inventory than in 2017 according to Jonathan Miller of the Miller Samuel appraisal firm) and more hesitant due to increased interest rates.
Jonathan Miller, founder of Miller Samuel, said, “the word of the year is reset…It’s like we came off the autobahn. It feels very slow relative to the last 3-4 years but, historically, it’s not.”
According to Daniel Levy, chief executive of CityRealty, the big story of 2018 is the drop in sales volume. Volume dropped from 13,295 units sold in 2017 to 10,354 units sold in 2018. Though volume fell -3.3% y/y, volume fell -18.5% from Q3 2018.) Levy optimistically admitted, “While volume is down, it’s not falling off a cliff here.”
Steven James, New York City president and CEO of Douglas Elli man Realty in Manhattan, thinks the drop in 2018 sales prices is the big story. According to Elliman’s Q4 market report in Manhattan, the median price of a condominium or co-op sold for $999,000, -10.6% lower than in Q3 2018 and -5.8% lower than in Q4 2017. This is the first time in three years that the median price specific to this market segment has fallen below $1M.
The slower pace of sales and declining prices in 2018 have caused developers have become more strategic, to incentivize, and to negotiate. Incentives such as picking up closing costs, paying 3-5 years of common fees, adding extra storage space and/or amenities are now part and parcel of deals. And price negotiations are now part of the nomenclature. Susan M. de Franca, chief executive of Douglas Elliman Marketing, said, “When inventory levels were tight, you’d never hear the word ‘negotiate’ in a developer’s market.”
All the above being said, as always, sales prices and sale volume are specific to neighborhood. Sellers are still in the driver’s seat in the West Village and NoHo and Sellers are still on the autobahn in Brooklyn. De Franca of Douglas Elliman Marketing said, “Some people who are priced out of Brooklyn are coming back to Manhattan now.”
What does 2019 look like for real estate in Manhattan? Steven James of Elliman in Manhattan, is putting a great spin on the resetting market. He said, “(The reset in the market) means we are finally moving in the right direction which, in turn, will mean an eventual uptick in values down the road. Sellers are finally getting the message about pricing and once that occurs on a bigger level, we’ll have an even better market.”