According to their latest sales report, Douglas Elliman Realty and Miller Samuel indicate that total sales of Manhattan real estate dropped by -3% in Q1 2019. This is the worst Q1 sales showing since the financial crisis, the sixth straight quarter of declining sales and the longest downturn in sales in the 30 years that Miller Samuel has been keeping real estate transaction data.
The data experts involved with this report indicate three causes for these dismal sales figures. The causes include an over-supply of high-end apartments, a lack of foreign buyers due to new restrictions on offshore investments in the US and to the new federal tax law passed at the end of 2017 which eliminated real estate deductions in high tax states.
The new “mansion tax” just approved by New York state legislators is another glitch that will impact Manhattan real estate sales. This latest state tax institutes larger additional taxes on the sale of multimillion-dollar homes. Real estate experts see the mansion tax and what is called a “pied-a-tier” tax on second homeowners and/or investors as further pressure on an already struggling Manhattan markets.
No price points within Manhattan’s housing market got off scot- free here. Jonathan Miller, CEO of Miller Samuel, said, “It’s like a layer cake. When you have a softening at the top, it starts to melt into the next layer and the next layer after that because those buyers further down have to compete on price.”
Take a look at the price drops of median priced co-ops and condominiums in Manhattan:
Studios –
2018 – $$0.50M
2019 – $0.48M
One Bedroom –
2018 – $$0.86M
2019 – $0.80M
Two Bedrooms –
2018 – $1.70M
2019 – $1.55M
Three Bedrooms –
2018 – $3.50M
2019 – $2.78M
Four+ Bedrooms –
2018 – $6.85M
2019 – $5.35M
Miller does not think the outlook for this year’s real estate sales is likely to improve, especially “with the new mansion tax” exacerbating inventory levels and increasing by +9% during Q1 2019 along with a a 9-month supply of homes on the market. Couple these inventory increases of existing homes with a glut in newly constructed units, a +56% increase from last year and a 19-month supply, and it’s no wonder Miller is not optimistic.
Take a look at the Market Share shifts from Q4 2018 to Q1 2019:
Studios –
2018 – 16.2%
2019 – 11.2%
One Bedroom –
2018 – 39.4%
2019 – 40.6%
Two Bedrooms
2018 – 28.3%
2019 – 29.6%
Three Bedrooms
2018 – 11.4%
2019 – 13.1%
Four+ Bedrooms
2018 – 4.7%
2019 – 5.5%
Thanks to CNBC and Douglass Elliman – Miller Samuel for the data.
