Manhattan real estate sales plunge 38%, but cash deals hit all-time record

This is the steepest drop in sales since the recession.

Manhattan real estate sales plunge 38%, but cash deals hit all-time record

According to new reports, Manhattan real estate sales dropped 38% in the first quarter as sellers and buyers fought over prices. Mortgage rates also remained volatile.

According to Miller Samuel and Douglas Elliman, the total sales volume dropped to $4.4 billion. There were 2,242 sales of apartments and townhouses in the quarter, as compared to 2,546 in the first quarter 2022. According to the report, the average sales price dropped 5% to $1.95million and the median sales price fell 10% at $1.075 million.

This drop in sales and prices comes after a 29% decrease in the fourth quarter. It suggests that the nation’s largest realty market is correcting following a post-pandemic boom both in demand and prices. Brokers, buyers, and sellers are all wondering where Manhattan's new "bottom" will lie.

Jonathan Miller, Miller Samuel's CEO, said that he believes there will be a seasonal increase in spring. "But it all depends on whether or not the Federal Reserve holds rates at their current levels."

According to brokers, the greatest challenge in negotiating deals is the large gap between seller and buyer price expectations. Buyers still have limited options in Manhattan due to the relatively low inventory or unsold listings. Miller Samuel reported that 6,996 homes were on the market for the first quarter. This is slightly less than the 5,200 average over five years.

Compass' Jason Haber stated that "there is still a disconnect between buyers & sellers." "Sellers don't have to cut prices in order to make deals. They are confident. They believe that if they lose a buyer, there is another one waiting. They don't panic sell or think they need to get out right away.

Although sellers have reduced prices, it is not enough to satisfy today's bargain-hunting customers. According to Serhant, the average discount between the initial price and the sales price for the first quarter was 7%. This is up from 5% in fourth quarter. Coury Napier (director of research at Serhant) stated that "weary buyers were still able to negotiate."

In the face of possible recession, volatility in stock markets and a banking crisis, buyers still worry about overpaying. Brokers say that buyers have been calling for price reductions of 20% or more for months, with hopes of being satisfied.

Noble Black, Douglas Elliman: "Buyers have been waiting for huge reductions for the past three quarters and they aren't coming," he said. "And I don’t believe those huge reductions will be coming."

Frederick Warburg Peters (president of Coldwell Banker Warburg) stated in his first quarter report that "the big price drops seem behind us, while property costs have plateaued."

The high end has seen a strong level of interest and bidding. Miller stated that luxury sales, or deals within the top 10% market according to price, rose to an all-time high of more than 11% during the quarter. Brokers believe that wealthy buyers prefer to pay cash, and are therefore less affected by higher mortgage rates.

Miller stated that cash deals accounted for a record 57% increase in sales during the quarter. Three-quarters (75%) of all sales above $5 million were cash transactions at the high end.

Brokers believe they are seeing signs of strength in the second quarter, especially considering the improvement in the market for higher-end properties over the previous quarter. According to the Olshan Report, sales contracts for properties valued at $4 million or higher increased from 16 to 32 transactions per week in January to 32 in March.

However, much depends on the economy and future interest rates. New York City is home for many financiers and buyers. This spring and summer, Manhattan's housing market will be influenced by the performance of the stock markets.

Black stated, "Based on the things I see now we're getting into a healthier place during spring." "It's definitely not a seller's marketplace, but it's getting busier every month."