Manhattan home resales tumble as US tax overhaul sidelines buyers

[NEW YORK] Manhattan home resales fell in the fourth quarter as buyers wavered ahead of the expected tax overhaul and stood firm in their refusal to overpay.

Sales of previously owned condos and co-ops dropped 11 per cent from a year earlier to 2,127, appraiser Miller Samuel Inc and brokerage Douglas Elliman Real Estate said in a report on Wednesday. That was the lowest for a fourth quarter since 2011.

Buyers who did commit to a purchase held out for the best deal. More than 88 per cent of homes that changed hands in the quarter did so at or below the asking price, the firms said. Resellers offered discounts of 5.7 per cent on average, compared with 4.5 per cent a year earlier. The median price for resales was US$916,425, up 1.8 per cent.

"The buyer is very worried about overpaying," said Steven James, chief executive officer of Douglas Elliman's New York City division. "The fourth quarter was when it absolutely just caught in their throat, where they said 'No, I'm not going to do it.'"

Manhattan home prices aren't rising as sharply - or briskly - as they were just two years ago, and buyers have taken notice of the new measured pace of growth. Plans to pass a federal tax law that limits deductions for state and local levies, and would make homeownership more costly, also weighed on shoppers' minds, said Hall Willkie, co-president of Brown Harris Stevens.

"In times of uncertainty, if buyers can delay a decision, they do," Mr Willkie said. "It also increases their price sensitivity a great deal. They want to know the price they're paying is justified."

Corcoran Group, in its own quarterly report on Wednesday, said that while the number of closed deals was little changed, purchase contracts declined 14 per cent from a year earlier, to 2,469. "Lingering high prices" pushed condo resales down to 929 transactions, the fewest since the end of 2011, the brokerage said.

Brown Harris Stevens, in a joint report with Halstead, said prices for three-bedroom apartments fell everywhere except Midtown, where closings at the Billionaires' Row tower 432 Park Ave kept the median elevated. On the Upper West Side, previously owned three-bedroom homes sold for a median of US$2.35 million, down 19 per cent from a year earlier. Between 14th and 34th streets, the median for price for a three-bedroom previously owned home fell 23 per cent to US$3.26 million.

A newly married couple asked Brown Harris Stevens broker Militza Van Doren in October to help find them a two-bedroom home for less than US$2 million. They quickly zeroed in on a high-floor unit at an East 85th Street tower with unobstructed views of the city and the East River, and more than 1,200 square feet. The asking price was US$1.925 million, or 3.5 per cent less than what the owners sought when they first listed it in September.

Then the negotiating began. The couple suggested an initial bid of US$1.695 million, which Ms Van Doren feared would be too low. But the sellers countered the offer, and after some back and forth, agreed to part with the property for a little more than US$1.8 million. The deal, signed in November, will probably be completed next month.

"In the end, both parties were pleased," Ms Van Doren said. "And they wanted to meet each other. That very rarely happens."

BLOOMBERG