Manhattan home sales surge as cuts bring prices to buyers' level

[NEW YORK] Manhattan homebuyers found deals they couldn't refuse in the second quarter, driving up sales of previously owned properties by the most in more than two years.

Purchases of resale homes jumped 16 per cent from a year earlier to 2,597, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. Buyer interest was fueled by average price cuts of 6.1 per cent across all property types. The last time the average discount was larger was the third quarter of 2012, when it was 7.2 per cent.

Sellers of luxury apartments took the whittling further, cutting prices by an average of 10 per cent, the most since the end of 2010 and the second-biggest discounts in more than 16 years of record-keeping.

"The sellers definitely got it," said Diane Ramirez, chief executive officer of brokerage Halstead Real Estate, which released its own report Thursday saying there was a 28 per cent jump in resales in the second quarter. "They said, 'We've got buyers out there who are serious but that are not moving forward, so let's give them a reason to move forward.'" Manhattan home shoppers held back last year, uninspired to commit to a purchase when sellers were holding fast to their lofty asking prices, even as inventory climbed. A rising stock market since the US presidential election sparked fresh interest in browsing, and sellers sensed an opportunity to offload apartments that had been lingering.

Last quarter's sales increase was the biggest since the first quarter of 2015, when they jumped 22 per cent. Properties that sold in the second quarter spent an average of 108 days on the market, compared with 89 days in the same period last year, Miller Samuel and Douglas Elliman said. Luxury homes, defined as the top 10 per cent of deals by price, were listed for 231 days on average before finding buyers, up from 169 days in the second quarter of 2016.

Buyer interest jumped across all property types and price ranges, lifting the overall median price of completed deals and chipping away at some of the inventory. The median price of resales climbed 3.2 per cent from a year earlier to $975,000, while the luxury median rose 3.5 per cent to US$6.84 million, Miller Samuel and Douglas Elliman said.

There were 5,290 previously owned homes listed for sale at the end of the second quarter, or 1.3 per cent fewer than a year earlier, the firms said. Some were sold and some owners just gave up.

"Those sellers who refused to get the message took their properties off the market," Steven James, CEO of Douglas Elliman's New York City division, said in an interview.

The frenzy might not last though. Contracts to buy homes in Manhattan fell 8 per cent in the quarter from a year earlier to 3,258, brokerage Corcoran Group said in its own report Thursday. Corcoran cited the high price of the remaining supply as one reason for the decline.

Buyers also aren't showing much urgency to close a deal, Frederick Peters, CEO of Warburg Realty, said in a note this week discussing the market in the second quarter. These days, shoppers negotiating a price aren't worried they'll forfeit a deal if they wait out a weekend or vacation before responding to a seller's terms, he wrote in his note.

While bidding wars still happen, there were fewer instances where buyers agreed to pay more than the seller was seeking. Fourteen per cent of all completed deals in the second quarter were above the listed price, compared with 16 per cent a year earlier, Miller Samuel and Douglas Elliman said. For luxury properties, the figure was 3.5 per cent.

"Our market cannot support aspirational pricing by sellers waiting for that 'one buyer' who will overpay for their home," Warburg's Peters said in his note. "Buyers are as price-conscious as I have ever seen them."

BLOOMBERG