Even though prices remain prohibitively high across the board, a slowdown seems to be on the way
While it’s unlikely that anyone will be especially heartened by the latest batch of Manhattan market reports, reflecting sales in the third quarter of 2016, there may be some good news: even though prices are still extraordinarily high, sales were down and inventory was up, suggesting that buyers are sending a message to sellers.
“We’re experiencing a certain level of disconnect now between what buyers are willing to bid and what sellers are willing to sell for,” Pamela Liebman of Corcoran told Bloomberg. Or, as Elliman’s numbers whiz Jonathan Miller told Bloomberg, “Buyers are more wary. There isn’t the same intensity of activity to burn through the new supply.”
Let’s look at the numbers: According to Elliman’s data, average and median rents have both increased year-over-year, with the former sitting at $2,032,459 and the latter at $1,073,750. That’s not as high as the record-breaking numbers from the first quarter of 2016, but it’s still high. Corcoran’s numbers are slightly lower, particularly on the average price—which they have below $2 million—but it’s not that significant of a difference.
New developments are at least partly to blame: both the average and median prices for new developments have jumped astronomically, with the former hitting $5,355,827 and the latter at $4,011,044. (This was also corroborated by Halstead’s data.) And the luxury side of things isn’t much better, with this quarter seeing the highest number of apartments over $10 million sold since the financial crisis of 2008.
But Miller says that’s a “statistical distraction,” and the resale market is where the real story is—if you’re a normal person looking to buy, anyway. According to Elliman’s report, the resale market makes up nearly 88 percent of all sales in Manhattan, and the numbers there aren’t much better. The average sale price is still over $1 million, but sales fell and inventory was up, pointing to that slowdown we mentioned earlier. And according to the Corcoran report, demand is still high, but prices remain prohibitive “especially for first-time buyers and buyers looking to upgrade to larger apartments.” Yikes.
And there’s this interesting tidbit from the Corcoran report:
This quarter, insecurity about the upcoming elections has also motivated certain buyers to delay making a decision until after Nov. 8th. Historically this happens with presidential elections and this year is no different. 40% of Corcoran Manhattan agents who responded to a 3rd Qtr. 2106 market survey said they have clients who are waiting for the election results before committing to buy.
So what’s the takeaway with all of this? Well, you probably still can’t afford to buy in Manhattan, for one thing. But even though the numbers are still ridiculous, a reckoning may be coming. We’ll let Miller have the last word here, via Bloomberg: “We’re clearly seeing a slowdown. This era of aspirational pricing is coming to an end. Buyers get the message first.”