Prices down and inventory up has us in buyer’s market
- Serj Markarian
- Jul 3, 2024
- 2 min read
I’m sending today’s email a day early due to the 4th of July holiday tomorrow and wanted to share some highlights from the Q2 2024 Manhattan Market Report, released yesterday, before next Thursday’s email. In short, we’re seeing a modest upward shift in apartment closings and inventory. Apartment prices, however, fell 3 percent from a year ago, averaging just over $2 million—nearly 6 percent up from the previous quarter.
The price drops result from a rising inventory of apartments, which are taking longer to sell. High-end market inventory, in particular, spiked by 22 percent, likely because wealthy individuals typically hold off on purchases until after an election due to uncertainties.
According to Jonathan Miller, CEO of Miller Samuel, there are now over 8,000 apartments for sale in Manhattan—approximately 13 percent more than the 10-year average of 7,000. Currently, we have a 9.8-month supply of apartments, meaning it would take 9.8 months to sell the existing apartments at the current sales pace if no more were added. Any number over six months indicates excess supply, placing us in a buyer’s market.
The increase in closings can be partially attributed to high rents, which haven’t budged. Potential buyers in rental units, who were waiting out the sales market, are finally deciding to buy, hoping interest rates will come down later this year. Miller noted, “If people were sitting on the fence, the high rents maybe helped push them into the sales market.”
The gap between buyer and seller expectations is narrowing, as per Miller, leading to more closed deals. Persistently high mortgage rates have kept many prospective buyers on the sidelines, but it hasn’t significantly impacted the overall volume of closings, given that 62 percent of sales in Manhattan were all-cash. Another reason for the increase in sales activity is likely due to buyers taking advantage of price drops, despite high mortgage rates.
Brown Harris Stevens CEO, Bess Freedman, is hopeful for improvement in the second half of this year. She says, “There’s no question there is still strong demand for Manhattan apartments, but for sales to really pick up, price adjustments will be needed in some segments of the market.”
If you have questions about the report or would like to discuss your real estate needs, please reach out. Meanwhile, have a safe and happy 4th of July holiday.
