Are you considering buying a luxury apartment in Manhattan? Well, now might just be the perfect time as the market is shifting in your favor.
Recent reports show that Manhattan is currently experiencing a buyer’s market, with apartment prices falling and inventory rising. The average real estate sales price in Manhattan dropped by 3% to slightly over $2 million, while the median price decreased by 2% to $1.2 million. Prices for luxury apartments also saw a decline for the first time in over a year.
Why the price drops? The increasing inventory of apartments for sale is one major factor. With more than 8,000 apartments currently on the market, Manhattan now has a 9.8 month supply of apartments for sale, indicating a shift towards a buyer’s market. This surplus of supply is a stark contrast to the national real estate landscape where tight supply has kept prices high.
Experts suggest that the high prices in Manhattan post-Covid were unsustainable, leading both buyers and sellers to finally adapt to a changing interest rate environment. This shift has resulted in the narrowing of the gap between buyer and seller expectations, leading to an increase in closed deals. In the second quarter, there were 2,609 sales, marking a 12% increase from the previous year.
Moreover, high rents in Manhattan are also playing a role in boosting sales. With the average monthly apartment rental price still exceeding $5,100, potential buyers are opting to enter the sales market rather than paying high rents. The hope is that interest rates will begin to decrease by the end of 2024 or early 2025, making buying more appealing.
Although mortgage rates have a lesser impact in Manhattan due to a majority of cash sales, the market is seeing a slowdown in luxury purchases as uncertainty surrounding the upcoming elections looms. The median sale prices in the luxury segment fell by 11% in the second quarter, with a 22% surge in listing inventory.
Ultimately, it’s an interesting time for buyers in Manhattan as the market undergoes a notable shift. Whether this trend persists or changes in the latter half of the year remains to be seen. Stay tuned for more updates on the Manhattan real estate market on Extreme Investor Network.