While the 2023 Q1 Manhattan Residential Report numbers may look disappointing, there is optimism among analysts and industry leaders for an uptick in market activity this spring. According to the just-released Q1 report, the market saw a 33 percent decline in sales from the same period last year—which was one of Manhattan’s strongest years, as I repeatedly remind everyone. In fact, one may argue that the dynamic of the percentage drop is skewed based on that factor alone. It is also important to point out that Q1 sales were higher than pre-pandemic sales—specifically the first quarters of 2018, 2019, and 2020—suggesting a market correction after a post-pandemic boom in prices and demand.
Although high mortgage rates have been attributed to the market slowdown, the luxury market hasn’t been affected nearly as badly, given that wealthy buyers prefer paying cash. This past quarter, cash deals hit a record high, making up 57 percent of all sales; and for sales over $5 million, three-quarters were all cash deals.
Upon examining month-to-month activity within Q1, there was a 34.7 percent increase in signed contracts from February to March—nearly 25 points higher than the typical percentage increase between those months. Also, new listings spiked nearly 50 percent compared to the usual 10 percent we see going into Spring.
According to another report, past quarter experienced a year-over-year price drop of 15 percent, which may be encouraging to buyers. However, overall, there appears to be resistance among sellers and buyers alike. Sellers have not been quick to lower their asking price, and if so, it isn’t significant enough to appeal to would-be buyers looking for significant discounts. Also keep in mind, as I’ve mentioned before, sellers who secured a very low mortgage rate during the height of the pandemic, are not necessarily eager to sell, as they do not want to forfeit what seems like a “once-in-a-lifetime” rate.
Nonetheless, as our CEO Bess Friedman points out, “even with all the uncertainty out there, people still have the need to buy and sell real estate.” It is expected that the Manhattan residential market will remain active in the months ahead, despite the recent banking crisis and sluggish economy. Some suggest that because New York City is home to many buyers and sellers in the financial industry, stock market performance could influence market activity this spring and summer.
Jonathan Miller, CEO of Miller Samuel shares this confidence for a busy spring, “…there's probably going to be a normal seasonal uptick, if not a little bit more of an uptick in the spring. The spring market, which is typically the Super Bowl of any annual housing market, is going to see an uptick in activity as usual. And that will lessen downward pressure on prices in some markets.”
Please reach out with any questions about the Q1 report or if you would like to discuss your real estate needs. To all who observe, I wish you a Happy Passover and Happy Easter.