Manhattan resale home prices hit record in Q3

But owners pare an average of 6.8% off their asking prices

NEW YORK: The price of Manhattan resale homes hit a record in the third quarter, but sellers shouldn’t get too bullish. It took some discounting to get there.

Owners pared an average of 6.8% off their asking prices in the quarter – the second-most since 2010 – and the adjustments spurred a flurry of sales at all price levels, pushing the resale median up to US$995,000, according to a report by appraiser Miller Samuel Inc and brokerage Douglas Elliman Real Estate. That was the highest level since the firms started tracking the data in 2003.

“Whenever the market feels and looks and smells healthy, sellers get intoxicated by that, and, as an agent, you want to say, ‘Please don’t drink too much here,’” Steven James, chief executive officer of Douglas Elliman’s New York City division, said in an interview. “The market now is people who are motivated to sell.”

After years of being of able to dictate prices amid a shortage of supply, Manhattan homeowners now are reigning in their loftiest expectations and agreeing to pocket more-modest gains on their properties as a way to get deals done.

Buyers, who held back for much of 2016, are once again signalling their interest. The number of resales in the three months through September rose 7.3% from a year earlier to 2,908, Miller Samuel and Douglas Elliman said. It was the biggest quarterly sales total in two years.

While the median price of those transactions climbed just 1.9%, it was enough to reach a high-water mark.

“This is the paradox,” said Jonathan Miller, president of Miller Samuel. “Sellers are enabling more activity by coming down from unrealistic pricing. And you’re seeing more transactions, which include higher-end transactions.”

Corcoran Group released a report last Thursday showing that, when it comes to resales, the lower the property’s price, the better it did. Completed deals for previously owned co-ops, which are usually cheaper than condos, increased 5% from a year earlier to 2,098, the brokerage said. Of those transactions, 84% were for less than US$2mil.

Purchases of resale condos, which are generally costlier, fell 9% to 1,012 – the only category where sales declined, Corcoran said. Deals for less than US$3mil made up 92% of condo resales in the quarter, but only 66% of the inventory was in that range.

While there were still bidding wars, fewer buyers were interested in paying more than the asking price, Miller Samuel and Douglas Elliman said.

Of all sales that closed in the quarter, 13% were above the list price, down from 18% a year earlier, according to the firms. Studios, the smallest and cheapest category of apartments, had the biggest share of buyers who paid more – 17%.

The jump in transactions also put a dent in resale inventory, bringing it down 4.1% to 5,075 listings as of Sept 30, Miller Samuel and Douglas Elliman said. The absorption rate, or the amount of time it would take to sell all those units at the current pace, dropped to 5.2 months, from 5.9 months a year earlier.

“We’re back to a healthy market, but that healthy market can change on a dime,” said James of Douglas Elliman. “When people feel like ‘Oh the market’s come back, we can make more money’ – I don’t think that’s the way to read this report.”

Sellers are enabling more activity by coming down from unrealistic pricing. And you’re seeing more transactions, which include higher-end transactions. Jonathan Miller