Recent reports have indicated that Manhattan is experiencing a shift towards becoming a buyer’s market in the real estate industry. The second quarter of 2024 saw a decrease in apartment prices and a rise in inventory levels. The average price of real estate sales in Manhattan dropped by 3% to just over $2 million, while the median price also fell by 2% to $1.2 million. Luxury apartment prices, which had been on the rise for over a year, also experienced a decline during this period. These price decreases can be attributed to the increasing number of apartments for sale, which are now taking longer to sell than before.
Manhattan currently has over 8,000 apartments available for sale, surpassing the 10-year average of around 7,000 units. This increase in supply has resulted in a 9.8 month supply of apartments for sale, indicating that the market is now favoring buyers rather than sellers. According to Brown Harris Stevens, any supply figure above 6 months suggests an oversupply in the market, leading to a buyer’s market situation. This contrasts with the national real estate landscape, where tight supply conditions have continued to keep prices high.
Real estate analysts and brokers believe that the strong prices in Manhattan following the Covid-19 pandemic were unsustainable. As interest rates began to rise, both buyers and sellers have started to adjust their expectations, leading to more transactions taking place. The second quarter of 2024 saw a 12% increase in sales compared to the previous year, marking the first sales rebound in two years. The gap between buyer and seller expectations has started to narrow, prompting more deals to close.
The high rental prices in Manhattan, with the average apartment rental cost exceeding $5,100 per month, have also played a role in boosting sales. Many potential buyers who had been renting and waiting for the sales market to shift have now decided to enter the market. The hope is that interest rates will start to decrease towards the end of 2024 or early 2025, prompting more buyers to make a move. While mortgage rates have a lesser impact on Manhattan real estate due to the prevalence of cash sales, the high rental prices have influenced buyer decisions.
Despite the overall decline in prices across the Manhattan real estate market, the luxury segment has been particularly affected. The median sale prices in the luxury segment, representing the top 10% of the market, fell by 11% in the second quarter of 2024. Listing inventory for luxury apartments surged by 22%, indicating a slowdown in purchases by wealthy buyers. The uncertainty surrounding upcoming elections has contributed to this hesitancy among high-end buyers, with many choosing to wait before making significant purchases.
Manhattan’s real estate market is currently experiencing a significant shift towards a buyer’s market, characterized by falling prices and increasing inventory levels. The changing dynamics between supply and demand, along with adjustments in buyer and seller expectations, are shaping the market landscape. High rental prices and the impact of cash sales on mortgage rates are influencing purchasing decisions. As the market continues to evolve, both buyers and sellers will need to adapt to these changing conditions to navigate the Manhattan real estate landscape effectively.