Manhattan sales slump broadens in Q3

New York

MANHATTAN'S luxury apartment sales continued to fall in the third quarter, but now the starter market, which had been more resilient, could be losing momentum as well.

The median sales price fell to US$1.1 million, down 4.5 per cent, and sales volume fell by more than 11 per cent from the same period in 2017, according to a report from Douglas Elliman. Other real estate agencies reported similar declines in sales volume and price.

That the top of the market remains soft is not surprising - a glut of new condo construction and a lack of urgency from mostly all-cash high-end buyers have hobbled luxury sales for several quarters.

But a sharp increase in inventory of studio and one-bedroom apartments suggest a slowdown of the broader market, said Jonathan Miller, the real estate appraiser who prepared the Elliman report. There was a 21 per cent jump in the number of one-bedroom apartments for sale, compared to the same period last year - the most of any category - followed by a 15.5 per cent increase in the number of studios on the market.

"Think of it as a correlation with rising mortgage rates," Mr Miller said, noting that the entry-level market is more dependent on financing, and climbing rates have more buyers hesitating. About 63 per cent of sales less than US$500,000 in the most recent quarter included financing, he said.

"We're really seeing hesitancy," said Diane Ramirez, chief executive of Halstead, which also released a new report. Resales, which make up more than 85 per cent of the market, spent an average 104 days on the market, up 11 per cent from the same period in 2017, she said. She blamed the slowdown over the summer, typically one of the most robust seasons for home sales, on a buildup of inventory across all price points.

Overall inventory rose 23 per cent, compared to that of the same period last year, according to a new Corcoran report, making it the eighth straight quarter in which supply was higher than in the previous year.

"Sellers have to be razor-sharp on pricing," Ms Ramirez said, or their listings may get lost in the shuffle.

Still, the market is not exactly sputtering. For context, Mr Miller said, there were 2,987 sales last quarter - about 9.5 per cent more than the 10-year average.

"It's kind of like a reset," he said, after several years of record price growth and sales.

Even with the slowdown, about 9.1 per cent of apartments sold for more than asking price, when a stable market might have just 5 to 7 per cent of units entering a bidding war, he said. (The market peaked in 2015, when 31 per cent of listings sold for more than list price.) What remains to be seen is how much downward pressure the recent tax overhaul will have on prices in the coming months. Because of limitations placed on local, state and property tax deductions, which are expected to disproportionately affect high-cost housing markets like that of New York, Mr Miller said he expected some hand-wringing from price-conscious buyers. NYTIMES