Luxury condo sales slump broadens
NEW YORK: Manhattan’s luxury apart- ment sales continued to fall in the third quarter, but now the starter market, which had been more resilient, could be losing momentum as well.
The median sales price fell to $1.1 million, down 4.5%, and sales volume fell by more than 11% from the same period in 2017, according to a report from Douglas Elliman. Other real estate agencies reported similar declines in sales volume and price.
That the top of the market remains soft is not surprising — a glut of new condo construction and a lack of urgency from mostly all-cash high-end buyers have hobbled luxury sales for several quarters.
“But a sharp increase in inventory of studio and one-bedroom apartments suggests a slowdown of the broader market,’’ said Jonathan Miller, the real estate appraiser who prepared the Elliman report.
There was a 21% jump in the number of one-bedroom apartments for sale, compared to the same period last year — the most of any category — followed by a 15.5% increase in the number of studios on the market.
“Think of it as a correlation with rising mortgage rates,” Miller said, noting that the entry-level market “is more dependent on financing, and climbing rates have more buyers hesitating.’’
“About 63% of sales less than $500,000 in the most recent quarter included financing,’’ he said.
“We’re really seeing hesitancy,” said Diane Ramirez, chief executive of Halstead Property, which also released a new report.
Resales, which make up more than
85% of the market, spent an average 104 days on the market, up 11% from the same period in 2017, she said.
Ramirez blamed the slowdown over the summer, typically one of the most robust seasons for home sales, on a buildup of inventory across all price points.
Overall inventory rose 23%, compared to that of the same period last year, according to a new Corcoran report, making it the eighth straight quarter in which supply was higher than in the previous year.
“Sellers have to be razor-sharp on pricing,” Ramirez said, or their listings may
get lost in the shuffle.
Still, the market is not exactly sputtering. For context, Miller said, there were 2,987 sales last quarter — about 9.5% more than the 10-year average.
“It’s kind of like a reset,” he said, after several years of record price growth and sales.
Even with the slowdown, about 9.1% of apartments sold for more than asking price, when a stable market might have just 5 to 7% of units entering a bidding war, he said. (The market peaked in 2015, when 31% of listings sold for more than list price.)
What remains to be seen is how much downward pressure the recent tax overhaul will have on prices in the coming months.
Because of limitations placed on local, state and property tax deductions, which are expected to disproportionately affect high-cost housing markets like that of New York, Miller said he expected some hand-wringing from price-conscious buyers.
“When people start writing checks on their April tax bill, they’re going to see the higher costs,” he said. “It just becomes more visceral.”