Manhattan home prices slip 5.5% in first decline since mid-2020
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MANHATTAN’S homebuying market weakened at the end of last year but didn’t foreshadow a deep freeze heading into 2023.
Co-ops and condos traded for a median of US$1.1 million in the fourth quarter, a 5.5 per cent drop from the same period in 2021, according to appraiser Miller Samuel and brokerage Douglas Elliman Real Estate. It was the first year-over-year decrease in prices since sales stalled at the beginning of the pandemic, in the second quarter of 2020.
The quarter, though, doesn’t appear to be the start of a steep tumble.
“You’re going to see a modest decline in pricing over the year, but not a correction,” said Jonathan Miller, president of Miller Samuel.
Tight inventory is “underpinning” property values and keeping them from falling more dramatically, according to Miller. As is the case across the US, Manhattan sellers are reluctant to settle for discounted prices or give up the low mortgage rates they secured before the Federal Reserve began raising interest rates in early 2022.
There were 6,523 homes on the market at the end of the fourth quarter. While that’s up 5.1 per cent from a year earlier, it’s down 16 per cent from the previous three months, and still a low level for Manhattan.
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With the average rate on a 30-year, fixed mortgage topping out at 7.08 per cent during the fourth quarter, the share of Manhattan buyers paying all cash was just over 55 per cent. That was the highest share measured by Miller Samuel and Douglas Elliman since they started tracking forms of payment in 2014.
The pressures contributed to a slowdown in deals. Closed purchases totalled 2,546, down roughly 30 per cent from both the third quarter and a year earlier.
Even as short-term comparisons might suggest that Manhattan is struggling, the fourth-quarter data show a market that’s stronger than just before the pandemic. While prices have retreated from their highs, they’re still 10 per cent above the US$999,000 median at the end of 2019, and closings totalled nearly 6 per cent than three years ago.
“The overall narrative is more negative than it actually is,” Miller said. BLOOMBERG
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